The price crisis is tightening the coffers of many nations, especially small businesses. Costs rise, the cost of money grows, and creditors try to turn time into money. In Spain, delaying payment terms is reversing the downward trend seen in recent years. A Cepyme employers association report, analyzing the accounts of small and medium-sized enterprises in the first half of the year, confirms that collection times are lengthening, though there is no broad risk of non-payment.
Treasury strain does not weigh equally on the shoulders of a large company and a small one. In Spain, an SME-dominated economy, longer payment terms pose a challenge for many. For small businesses with 10 to 49 workers, the average time between invoice issuance and payment rose to 84.7 days, up 7.3% from a year earlier. For medium-sized firms with 50 to 249 workers, the period remained steadier, increasing just 0.5% to 84.8 days.
Guilt is not the issue, as the 2008 crisis suggested. Cepyme data shows that 88.6% of SME invoices are paid within the agreed schedule or with less than a 30‑day delay. Other indicators in the payment chain, including freelancers, begin to reveal signs of stress. The latest ATA barometer, linked to Cepyme via the large employer CEOE, shows that 41.6% of self-employed individuals report having committed some form of wrongdoing, a figure up nearly 10 percentage points over the past year.
Borrowing is on the rise
Cepyme data does not yet reveal cracks in the payment chain. Yet higher debt ratios emerge in a climate where central banks push rates higher, making money more expensive and potentially eroding punctuality. Debt remains high and growing, and increased interest rates add another burden to business accounts, according to the employers’ association.
The debt ratio, measured as total liabilities to net worth, climbed for the fourth consecutive quarter, ending July at 100%. In short, SMEs currently carry as much debt as equity, while small enterprises see debt growing at twice the pace of medium-sized ones. This marks the highest level since 2018 and is 12.7 percentage points higher than a year earlier, according to the authors of the report.
Stagnant profitability
The Cepyme study finds a 14% rise in sales versus the previous year, a figure not seen since the 1980s. This increase is driven by inflation, not necessarily by higher volumes, as bills rise to record levels. On the cost side, expenses are climbing as well, with medium-sized firms experiencing stronger turnover growth than smaller ones.
As revenues climb, costs follow suit, rising by 24% overall last year. Notably, energy costs surged by 113.7% for SMEs, while transport costs increased by about 20.5%. This represents the largest jump in the last two decades.
What remains stubborn is the return on assets. SMEs’ profitability hovered around 2.8%, roughly flat from the previous year and lower than any data observed between 2016 and 2020. The report attributes this profitability gap largely to activity levels that were about 55% lower than before the pandemic, coupled with ongoing inflation at around 45%, which pushes costs and squeezes margins according to the analysis.