Impact of Overdue Receivables on Economic Decisions of Enterprises

Piotr Bialowolski

Prace i Materiały, 2011, vol. 86, issue 2, 67-79

Abstract: The problems with overdue receivables should be of special attention, as they might not only influence the market decisions of enterprises but also affect market structure by spreading differently among different kinds of enterprises. In order to investigate the impact of delays in receivables a Survey on Receivables was designed and almost 8000 companies were surveyed in the year 2009. In the paper the author with application of standard statistical techniques empirically investigates the impact of payment delays on market decisions of enterprises in Poland. The analysis of qualitative impact of delays in receivables on economic activity of companies was conducted with application of logistics regression modelling. It enabled deriving conclusions for branch and company-size patterns of behaviour (economic actions) in reaction to problems with receivables. With respect to branches it was possible to establish that (1) Financial sector reports to the lowest extent connections between overdue receivables and market decisions. (2) Telecommunications companies that not only very often report problems with realization of their own payments due to payment delays, but additionally payment delays impede to very large extent their growth by reduction in the level of investments, by reductions of the employment size, but also stimulating price increases and causing problems with new products launch. With respect to the company size it appeared that (1) Small companies are to the highest extent affected by the payment delays. Delays in receivables reduce their growth potential by forcing them to cut not only investments but also employment. Additionally delays in receivables hinder their ability to introduce new products. (2) In case of large companies the most significant is the negative impact on investment.

Keywords: overdue receivables; firm behaviour (search for similar items in EconPapers)
Date: 2011
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