Companies in the Valencian Community are increasingly concentrating their efforts on managing the effects of inflation in their daily operations. This shift has reached a point where many firms are postponing other responsibilities, and a notable number are reconsidering growth plans to weather the current environment and preserve stability.
This trend is echoed in the latest European Payments Report conducted by Intrum, which analyzes challenges linked to rising prices across Europe in the wake of the war in Ukraine. The report notes that a solid majority of business leaders, 52 percent, are embracing a stance of greater autonomy to cope with the volatility. The outlook suggests this pressure will extend for at least another year.
The atmosphere of uncertainty and instability brought on by high inflation is already affecting the daily life of organizations. In Valencia, as many as 86 percent of companies report that the focus on managing economic risks reduces attention to other endeavors, a level well above the Spanish average of 54 percent and the European average of 53 percent. This divergence underscores how provincial firms are prioritizing liquidity and risk containment over growth initiatives in the near term.
The region identified the area around the Babylonian polygon in Alicante as a focal point for this discussion, highlighting the broader impact on local business dynamics. The observations align with the challenges described by analysts when inflation remains persistent, interest rates stay elevated, and labor costs rise, all of which squeeze profit margins. The report emphasizes that safeguarding liquidity has become a more urgent priority than pursuing aggressive expansion.
The situation does not look set to improve quickly. Data show that 59 percent of Valencia’s businesses, responding to inflation and higher financing costs, are rethinking growth strategies to gain efficiency and better control costs. This reorientation is more pronounced in Valencia than in many other regions and mirrors a wider European pattern where firms recalibrate for tighter margins and slower top-line growth.
Health and inflation dominate Valencians’ concerns, while perceptions of corruption diminish as priorities shift towards practical measures that stabilize finances.
Concrete steps appear limited, but 43 percent of companies surveyed within the autonomy scope indicate a plan to reduce costs in the coming months, a figure that surpasses the national average by around 12 points. At the same time, 38 percent say they will exercise more caution when assuming new debt, compared with 16 percent nationally. In contrast, only 4 percent intend to increase investments in innovation and development to respond to current conditions, suggesting that competitive advantages will come primarily from cost discipline and efficient operations rather than bold product initiatives.
More Time to Manage Payments
The study also delves into the payments landscape among regional firms, where the effects of persistent inflation are already noticeable. Up to 83 percent of regional business customers show a willingness to accept longer payment terms, a shift that marks a four-point rise from the previous year. This tolerance reflects pressure on cash flows as companies seek to preserve liquidity in a slower payment environment.
On the other hand, 57 percent of Valencian companies report dedicating more than ten hours each week to tracking customer payments, a substantial increase of twelve points relative to the national figure. Taken together, Spanish firms now spend an average of 81 days per year pursuing payment for their products and services, which is seven days more than the European average and indicates a systemic delay in cash conversion.
These insights reveal a market where managing accounts receivable and preserving liquidity take center stage. Managers are balancing shorter-term financial requirements with longer-term strategic decisions, often prioritizing reliability and risk mitigation over rapid expansion. The overall picture points to a cautious, financially prudent approach as businesses navigate inflation, labor costs, and shifting credit conditions.
In summary, Valencian companies face inflation with a pragmatic playbook: tighten cost controls, reassess growth trajectories, and extend timelines on receivables where possible. This stance aims to protect profitability and ensure ongoing operations while minimizing exposure to economic shocks. The broader European context confirms that these patterns are not isolated to one region; many firms across Europe share a similar impulse to fortify liquidity in an uncertain climate. This shared experience highlights the importance of disciplined financial practices and responsive planning as core competencies for resilience in the months ahead.