Micro-enterprises represent the largest category in terms of outstanding payments, with 43% of the total debt belonging to such organizations. Small and large companies share another 40% of the outstanding payments in Romania, with 20% each, shows “Business conditions in Romania,” an yearly study by KeysFin.
The biggest surge in outstanding payments was recorded in 2014, reaching LEI 86 billion in 2018, a 30% decrease. More than half of this debt consists of unpaid fees to suppliers. Romanian entrepreneurs usually deal based solely on trust, or at best only a minimal back-check of their partners before signing a contract, according to Roxana Popescu, Managing Director at KeysFin. This leads of course to lots of unpaid services or products which add up to the country’s huge figure of outstanding payments.
Despite a positive evolution of the Romanian economy in the past few years, with 54% of domestic companies generating a profit, some known issues of the Romanian business environment intensified in recent years, such as the lack of manpower or the high number of outstanding payments. Romania has over 600,000 micro-enterprises with a turnover of less than EUR 2 million, most of them in commerce, professional activities and constructions.
The DSO, the average number of days that it takes a company to collect payment after a sale has been made, and DPO, the average number of days that a company takes to pay its bills and invoices to its trade creditors, went down in the past 10 years, from 97 days in 2009 to 91 days (DSO) and from 178 days om 2009 to 160 days (DPO). While the figures are still high, this 7% decrease since 2009 suggests that Romanian are slowly becoming better payers.
In terms of industry sectors, the worst payment history is in constructions, while commerce, HORECA and healthcare report lower waiting times for outstanding payments. For example, in the construction industry, the DSO was reported at 178 day, while the DPO at 370. At the other end, in commerce, the DSO stand at 60 days and the DPO at 108 days.
Info-graphic by KeysFin.