How is Western Europe managing cash flow stress these days?

Current state of B2B payment trends in Western Europe

Across Western Europe, businesses are treading carefully through an unpredictable B2B payment landscape. Our latest survey, conducted at the end of Q1 and the start of Q2 2025, reveals a complex picture: while nearly half of companies (46%) report stable customer payment behaviour, the other half are grappling with mounting delays, overdue invoices, and a growing volume of bad debt.

Currently, 47% of B2B invoices are overdue—a striking figure that highlights the widespread impact of financial stress across the region. Bad debts now account for 6% of invoices, translating to direct hits on revenue and cash flow. And yet, despite this challenging environment, many companies are choosing not to scale back on trade credit. In fact, 50% of surveyed firms say they have maintained or even extended payment terms in recent months, often ranging between 31 to 60 days.

Strategic response to late payments and cash flow challenges

The result shows a clear strategy: building strong customer relationships while helping them manage cash flow with flexible payment terms. It’s a careful balance between supporting customers and protecting against risk—one that many businesses are handling with care.

Interestingly, stability is also reflected in Days Sales Outstanding (DSO), which remains unchanged for most, suggesting that despite payment pressures, collection processes are holding firm. Inventory levels, too, have been relatively steady, although more companies report stock build-up rather than faster turnover—tying up working capital and challenging liquidity positions.

Liquidity management and external funding solutions

To cope, businesses are delaying payments to suppliers more frequently. Supplier credit, along with bank loans and invoice financing, has become a vital lifeline. Internal resources alone are proving insufficient, and many companies now rely on external funding to bridge cash flow gaps.

Risk management strategies for B2B payments

In managing customer payment risk, the trend is clear. Nearly half of Western European firms are adopting a dual approach. Combining in-house credit provisioning with outsourced risk management offers both flexibility and resilience. Those relying solely on internal resources may find themselves at a disadvantage, as reserved cash for bad debt coverage is effectively frozen—unavailable for operations, investment, or agility in an unpredictable market.

Future outlook: Insolvency concerns and market expectations

Looking ahead, concerns mount. Nearly half of businesses expect insolvencies to rise in the coming months, a sentiment that underscores just how volatile the economic outlook remains. Still, there is cautious optimism: many companies anticipate improved inventory turnover and steady DSO, pointing to hope for stronger sales performance. Profitability, however, is another matter. With rising input costs, intensifying competition, and tightening margins, positive sales may not easily translate into healthier bottom lines.

Compounding these financial pressures are wider structural risks. From rising regulatory demands and cybersecurity threats to geopolitical uncertainty and supply chain disruptions, companies must remain agile and adaptable. It’s no longer just about surviving the quarter—it’s about preparing for persistent unpredictability.

Key takeaways: Strategic payment risk management for financial resilience

Our survey across Western Europe includes responses from companies across Austria, Belgium, France, Germany, Greece, Ireland, Italy, the Netherlands, Spain, Switzerland, and the United Kingdom. Findings for the Nordic region—Denmark, Finland, and Sweden—are explored in a dedicated report.

As businesses in Western Europe brace for what’s ahead, one thing is clear: the ability to manage payment risk strategically and flexibly will shape financial resilience in the months ahead.