European Professional Services hit hard by bad debt

Accountants, lawyers and recruiters are suffering most in the current economic downturn in Europe, writing off three times than companies in the utilities sector, for example.

A survey of almost 6,000 businesses across Europe by credit management services groupIntrum Justitia shows significant differences in how industry sectors are hit by bad debt and late payments. Businesses in professional services on average have to write off 4.5 percent of all transactions whilst businesses in utilities only write off 1.5 percent. Intrum Justitia believes the situation will worsen in 2012, but that there are protective measures to be made by businesses, measures essential to boosting Europe, according to Intrum’s EPI 2011 Industry White Paper.

Our survey indicates that things will start turning worse before they turn for the better. Professional Services are often first hit by client budget cuts, which means they serve as a warning of what may lie ahead. Unfortunately, history tells us that other Industries are to show significantly higher bad debt next year,” says Intrum Justitia CEO, Lars Wollung.

Professional Services also see the largest increase in write offs from the previous year, up 12.5 percent. Transportation write offs are also increasing fast, 9.5 percent up from previous year, although from a rather modest level. Real Estate see write offs decreasing significantly, with over 5 percent.

”Although the picture painted in our report may seem grim there are measures companies can take to protect themselves. There is a lot that can be done to help the businesses in boosting Europe. We see that businesses that know their customers and implement efficient credit policies get paid earlier and have to write off a smaller percentage off sales, comments Lars Wollung.”