Payment delays on the rise in Germany, particularly affecting Coface, a major market player
In 2025, German businesses faced an increase in payment delays, a trend primarily attributed to political instability, geopolitical risks, and ongoing economic challenges. According to a survey, around 81% of German companies reported new payment delays, up from 59% in 2021, with the average delay length increasing slightly to 31.8 days [1][2].
The causes of these delays are manifold. Growing political uncertainty and geopolitical tensions have eroded business confidence and trading conditions. In addition, 84% of firms offered extended payment terms, the highest since 2016, which further strains working capital [1][2]. The rise in economic pressure is also reflected by a growing shadow economy, reaching over 11% of economic output, indirectly affecting the formal economy’s liquidity and payment discipline [3].
Sector-specific vulnerabilities also play a role. The financial advisory sector, for instance, saw the steepest jump in payment delays, with an average increase of 10.3 days [2]. Persistent volatility in the German service sector has further influenced businesses' ability to pay promptly [4].
The impacts of these delays are significant. Cash flow pressures on suppliers and smaller businesses can lead to operational instability. Heightened credit risk and financial strain for companies relying on timely receivables are also concerns. Potential ripple effects, such as reduced investment and hiring confidence within German industry, are a cause for concern [1][2][3][4].
To mitigate these risks, companies are adopting various strategies. Proactive negotiations for clearer payment terms and early payment discount schemes are being encouraged. Strengthening credit risk assessment and monitoring of customer payment behaviors is another approach. Diversifying customer and supplier bases to reduce dependency on delayed payers is also being pursued [4].
Leveraging government economic stimulus programs designed to support liquidity and stabilise business activity is another strategy. Enhanced use of factoring or invoice financing to manage working capital during delayed payment periods is also being employed [1][2][3][4].
Despite these challenges, there are signs of improvement after three years of economic stagnation. Germany, along with EU and EFTA countries, remains the most promising market. Financial risk remains a concern, with 12% of companies experiencing prolonged payment delays, exceeding 2% of their annual turnover [1][2][3][4].
Looking ahead to 2026, a majority of German companies are optimistic, thanks to expected investments in defence, infrastructure, climate transition, and tax incentives for businesses. However, the construction sector continues to be the most affected by payment delays, with 24% of companies reporting such issues [1][2][3][4].
Coface's experience indicates that 80% of these delays are never recovered, representing a significant commercial risk and a negative economic signal. The average payment term in Germany remained almost unchanged at 32.5 days. The ninth Coface survey on the payment behavior of German companies was conducted in May and June 2025 on a sample of 847 businesses [1][2][3][4].
In conclusion, political and economic instability are key drivers causing increased payment delays in Germany in 2025, constraining liquidity and business operations. Firms can mitigate risks through tighter credit controls, strategic cash management, and utilizing financial instruments and government support where available [1][2][3][4].
[1] Coface, "Payment behaviour of German companies: delays are on the rise," 2025. [2] Coface, "2025 Coface survey on the payment behavior of German companies," 2025. [3] Deutsche Bundesbank, "Shadow economy in Germany: developments and consequences," 2025. [4] Bundesministerium für Wirtschaft und Energie, "German economic outlook and stimulus measures," 2025.
- In light of the growing political instability and geopolitical risks, many German businesses are adopting stricter credit controls to mitigate payment delays, with 84% of firms extending payment terms as a means of managing their working capital [1][2].
- The ongoing economic challenges and increased payment delays in Germany have led to a rise in the shadow economy, reaching over 11% of economic output, indirectly affecting the formal economy’s liquidity and payment discipline, particularly in sectors such as financial advisory and construction [3].
