Non-payment should be distinguished from insolvency. The figures show a trend towards companies not paying their bills, rather than companies going bankrupt, and may be regarded as a lead indicator of economic activity – or the lack of it. The graphs measure notifications of non-payment as a percentage of Coface’s commitment in each country. The figures are six-month moving averages, and will be updated on a regular basis.
At the end of last year the level of non-payment was unusually low.
Since the start of 1997 it has been increasing as a direct consequence of a rise in the number of relatively small bankruptcies. The textiles and building sectors seem to be the main problem areas.
The increasing level of bankruptcies seem to be the main cause of non-payments. However, a new law has been put into place which should help prevent company failures and protect creditors. Flanders is still the main problem area.
The situation seems to have stabilised below the general European level. Since the beginning of the year the level of non-payment has been at its lowest, with a high level of recovery and a low level of insolvency. Textiles remains a traditionally high-risk sector.
Non-payment levels seem to have stabilised in 1997, but due to usual long payment terms, it is still too early to assess the effects of a worsening situation during the last months of 1996.
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The level of non-payment was particularly high last year due to four large cases. 1997 should look fairly stable, close to the European average. However, the main problem is the recovery level which remains very low.