The latest edition of Coface’s annual survey on corporate payment experience in Germany was conducted in July and August 2024, gathering insights from 774 companies. As we enter a phase of relative economic calm, with no new major risk events shaking the German economy, payment behaviours have remained largely consistent with those observed in 2023. However, beneath this surface stability, rising credit risks and worsening business sentiment are painting a more concerning picture for the future.
Stable payment terms but worsening credit risks
One of the key takeaways from the survey is the continued stability in the offering of payment terms. In 2024, 80% of participating companies offered credit terms, which is nearly identical to the 79% recorded in 2023 and closely aligned with pre-pandemic levels (81%). The preference for shorter credit terms in Germany also remains intact, with the average payment term standing at 32.1 days—unchanged from last year and the shortest among all countries where Coface conducts corporate payment studies.
Similarly, payment delays have seen only slight fluctuations. The proportion of companies reporting new payment delays rose modestly to 78% in 2024, still below the 85% observed in 2019, but above the low levels seen between 2020 and 2022. The average duration of payment delays increased slightly to 30.8 days, just 0.7 days longer than in 2023. This is still considerably below the pre-pandemic average of 39.7 days, reaffirming that, at first glance, payment behaviours are largely stable.
However, this apparent calm conceals a significant rise in credit risks stemming from ultra-long overdue payments. In 2024, 16% of companies reported overdue payments exceeding 2% of their annual turnover—almost double the 9% reported last year. The machinery sector is particularly affected, with 30% of companies in this sector reporting overdue payments of over 2% of turnover. Based on Coface’s experience, 80% of these payments are never recovered, posing a substantial business risk that could lead to insolvency. The recent sharp rise in corporate insolvency cases highlights the serious threat these overdue payments represent.
Growing pessimism among German businesses
While payment behaviours have remained relatively consistent, the sentiment among German businesses has worsened significantly. Only 9% of participants reported that their business situation in 2024 was better than in the previous year. In stark contrast, 48% described their current situation as worse. This pessimism results in a sentiment balance of -39 points, which is lower than during the early months of the COVID-19 pandemic or after the onset of the war in Ukraine.
Unfortunately, the business outlook for 2025 offers little cause for optimism. German companies expect a stable but low business environment in the coming year, and political uncertainty—both domestic and international—remains a major concern. This instability, combined with supply chain issues and Germany-specific local difficulties (known as Standort-Schwierigkeiten), is causing businesses to be more cautious about the future.
Germany's waning appeal as a business hub
The survey also revealed that Germany is losing its appeal as a business location. While it still plays a significant role in the global economy, it is facing growing competition from other countries, particularly the United States and other EU nations, which are increasingly seen as more attractive business environments.
The trend towards de-risking—a strategy focused on reducing exposure to volatile markets—has also gained traction in 2024. 16% of German companies implemented de-risking strategies this year, up from 12% in 2023. Looking ahead, 30% of companies plan to adopt similar measures over the next three years, particularly in sectors like machinery, information and communication technology, and pharmaceuticals.
Conclusion: Stability with a storm on the horizon
While Germany’s corporate payment experience in 2024 may appear stable at first glance, the underlying risks are growing. Increasing overdue payments, rising insolvency risks, and worsening business sentiment suggest that companies need to remain vigilant in managing their credit risks. As political and economic uncertainties continue to impact the global market, Coface stands ready to support businesses in navigating these challenging times, offering solutions that ensure stability and security for the future.
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