The latest survey, “Recovery, Confidence, Cash Management, Financing: What Is the Business Community’s Outlook, and What Do They Favor?” conducted by Cabinet ARC and Ifop, reveals growing pessimism among businesses in the face of an economic climate that remains uncertain. While a majority of companies expect their business to remain stable, the prospect of economic growth is receding, and the worsening of payment terms and the gradual withdrawal of support from banks are causing increasing concern.
Dismal Business Forecasts
Business leaders are more pessimistic than last year… 23% of business leaders expect their business to decline over the next 6 months, a 6-point increase from 2023, while 59% expect it to remain stable. Only 18% of business leaders expect growth, a sharp decline of 15 percentage points compared to 2023 and the lowest rate recorded since the COVID-19 crisis.
Furthermore, nearly all companies are concerned about an economic slowdown: 94% of them believe the situation will not improve over the next 6 months, and more than half (52%) even expect it to worsen.
The effects of past crises continue to be felt: nearly 6 out of 10 companies (59%) estimate that it will take between 3 and 5 years to overcome the impact of the various crises on their financial health—a figure that has been rising steadily since 2022 and represents a 9-point increase compared to 2023. Furthermore, 35% of business leaders expect it to take 1 to 2 years.
In an uncertain economic climate, payment delays are skyrocketing
Faced with an economic climate perceived as risky, 63% of companies believe that leaders of microbusinesses and small and medium-sized enterprises (SMEs) do not receive sufficient legal support to anticipate and manage financial difficulties. Furthermore, 7 out of 10 companies fear an increase in bankruptcy filings among their clients, and 40% are concerned about their inability to repay debts (government-guaranteed loans, payroll taxes, invoices, etc.).
This situation is exacerbated by payment delays that have reached a record high: the average payment period rose from 15 to 17.5 days in 2024, its highest level in a decade.“According to the companiessurveyed,payment terms continue to serve as the key adjustment variable, withextending them being the primary toolcited for optimizingcash flow—even though this poses a major risk tofinancialhealth, ” ” explains Denis Le Bossé, president of Cabinet ARC. Nearly 48% of the executives surveyed report that they themselves are extending payment terms for their suppliers to meet their cash flow needs.
Despite the European proposal to reduce statutory payment terms from 60 to 30 days, 65% of companies believe this measure will not have the desired effect, and 66% doubt that their customers will be able to meet these new deadlines.“In this context, business leaders have overwhelminglysupported a new mechanism totruly compel companies to complywith payment deadlines for their stakeholders: linking fines tocompanies’financialresults,” emphasizes Denis Le Bossé.
This measure, supported by 68% of the executives surveyed, is seen as an effective way to hold delinquent payers accountable and reduce financial risks in an increasingly strained economic climate.
Concerns about nonpayment in the public sector persist
Nearly one in two companies reports that it has stopped bidding on public sector contracts, fearing that it will not be paid or will face prolonged payment delays. Although 57% of companies do business with the public sector, 84% of them report that payment terms have not improved and remain a major obstacle.
A pullback by financial institutions
For 42% of the companies surveyed, bank loans remain the most effective source of financing for meeting cash flow needs. At the same time, nearly 7 out of 10 companies (69%) believe that banks are pulling back from supporting very small businesses and SMEs—particularly those that have not yet repaid their state-guaranteed loans.
Compounding this situation, 48% of respondents noted a lack of involvement on the part of credit insurers, while 86% of them still view factoring as a financing solution that is too costly and therefore not very profitable, if at all.
This study was conducted by telephone between September 30 and October 29, 2024, with a representative sample of 501 companies with 50 or more employees.