Payment time limits: Big companies rule the roost
The blight of the terms of payment is still awaiting treatment. The draft law sent to the Competition Council for an opinion before entering the legislative circuit should, once adopted and published, reverse the trend. Long payment terms are the cause of the agony of an entire section of small and medium-sized entities. The law should trigger the change process which should guarantee, in particular, to SMEs and VSEs payments within normal deadlines. In 2020, a year marked by the Covid-19 crisis and its impact on the economy, these companies had to face an extension of the terms of payment. These deteriorated from 66 days to 279 days on average for VSEs in 2020 according to the Inforisk survey. This is an alarming level which can only deteriorate the business climate, because, instead of focusing on the development of their activity and on the search for new markets, entrepreneurs spend their time running after the collection of their dues. Without great bargaining power, VSEs are unable to pass on these delays to their suppliers. They find themselves in fact in a situation of lenders with an average gap of 133 days between their customer and supplier deadlines.
In the case of SMEs, the delays stood at 129 days, i.e. an increase of 12 days. «SMEs have managed to pass on the increase in their customer terms of payment by paying their suppliers later. In 2020, the net balance between customer and supplier terms of payment improved by one day,» underlines Inforisk. Still, SMEs with less than 50 million MAD in turnover are less well off: they find themselves with a payment period of up to 14 days!
The great paradox comes from large companies: in the midst of the Covid-19 crisis, they have improved their payment terms from 2 days to 95 days. In a position of strength, these large entities make sure to get paid on time but are reluctant to do the same, especially with VSEs and SMEs. «Large companies pay their suppliers later than they get paid by their customers, all with a positive impact on their cash flow. This is explained by a favorable balance of power and a bargaining power that allows them to impose their conditions on trading partners,» notes Inforisk. Large companies therefore continue to underperform in terms of payment terms. To put an end to bad practices, the draft law provides for a strong measure: the publication of the list of bad payers, which has been proven elsewhere.
The year 2020 was also characterized by the drop in intercompany credit standing below bank credit. Intercompany credit stood at 372 billion MAD versus 413 and 415 billion MAD respectively in 2019 and 2018. This development is due to the support measures put in place by the government for the benefit of the business world. These support measures are in particular the Damane Oxygène and Damane Relance products. This year, an amount of 53 billion MAD was distributed to companies, including 10.6 billion to VSEs and 32 billion to SMEs.
Khadija MASMOUDI
