It is not the primary reason, but it is one of the motives behind the existence and rise of e-invoicing. We are talking about late payments (or delinquency). A concept that has always existed and that all governments have tried to combat in different ways. The good news is that now, with the digital transformationtypical of this new era, the tools available to companies and authorities are much more effective. Easyap’s software is one of them, so as experts on the subject, we take these lines to analyze late payments in Spain. We tell you how executives and politicians are trying to combat it and the role of e-invoicing in this fight.
What do we understand by late payments and what consequences can they have?
Late payments are a legally recognized concept. It refers to when a buyer fails to meet their payment obligations regarding deadline, method, and/or amount. This can occur due to negligence, lack of knowledge, or any other reason. But the truth is that from the moment a non-payment occurs, the debtor or defaulter will have to face a series of consequences tax, administrative, social, or even criminal such as:
– Fines and penalties of various amounts.
– Seizure and loss of real estate or assets that guarantee certain operations.
– Bad reputation and inclusion in late payment default files.
– Difficulty in obtaining financing from banks and credit institutions and in contracting utilities like water or electricity for a business.
– Criminal convictions which can lead to prison sentences.
In turn, the concept of late payments is applicable to any field. However, someone being a defaulter does not mean they will not pay what they owe, but rather that they have not met the conditions agreed upon in the contract. The good news is that e-invoicing, as we will explain later, has arrived to combat late payments in Spain and the rest of the world very effectively.
The Delinquency Situation in Spain
At easyap, we are experts in electronic invoicing and work on international projects. We develop solutions for companies from different parts of the world. However, we are very familiar with the national business fabric. Therefore, we want to analyze the delinquency in Spain.
After the economic crisis, delinquency in our country had been decreasing in recent years, largely thanks to policies such as the Create and Grow Law. However, in 2022, it grew again, apparently as a consequence of COVID-19. Therefore, there are still important challenges in debt management and delinquency prevention.
In this regard, the Bank of Spain indicates that, in the financial sector, the delinquency in Spain in 2022 stood at 6.4%. This figure represents an increase from the years prior to the pandemic and in comparison to 2012 (5.3%). Here you can see how delinquency has evolved in Spain with updated data from several decades ago.
But… What is the delinquency rate?
Specifically, the delinquency rate, although is an indicator specific to the financial world, serves as a reference for other sectors. It is used to measure the proportion of loans that have not been paid on time within a given period. To calculate it, the total value of non-performing loans is divided by the total value of outstanding loans.
Likewise, the delinquency rate reflects the solvency and purchasing power of companies. A high delinquency rate can indicate a difficult economic situation and greater uncertainty in the future, which can have a negative impact on investor confidence and economic growth.
Evolution of the Delinquency Rate in Spain
But, returning to the national delinquency situation, let’s see how it has fluctuated over time. Taking 1981 as a starting point, which is when the first data was collected, the evolution of delinquency in Spain has had the following milestones:
– The 1980s was a period in which the delinquency rate fluctuated between 3.3% and 4%.
– Between the year 1991 and 1994, the delinquency rate shot up from 4% to 9%, reaching 9.15% in February 1994.
– From then until June 2000, there was a progressive decrease in the delinquency rate, which fell to 1.28%.
– Between 2000 and 2007,, a period of economic boom for Spanish companies, the rate fluctuated between 0.8% and 1%.
– From January 2008 to December 2013, due to the economic crisis, we experienced a strong and constant increase up to 13.62%.
– From then on, it has been gradually decreasing until 2022, when a change in trend and a rebound have been recorded.
Therefore, there are still significant challenges that must be addressed to ensure a healthy and stable economy.
Spain’s Situation Compared to Other EU Countries
Along these lines, Spain has not been the only country implementing policies to combat delinquency. The EU and its members have been studying for years how to combat this problem that affects all industries.
It is difficult to directly compare delinquency between countries due to differences in financial systems and measurement methodology. Even more so if we do not consider nations outside the EU. However, according to the delinquency rate of financial institutions reported by the Bank of Spain, Spain is not among the countries with the highest international rate.
In the EU, the delinquency rate varies significantly. This is because it is an indicator that depends on factors such as economic health, the solvency of consumers and businesses, and the effectiveness of prevention and management policies.In general, countries like Greece, Italy, and Portugal have higher delinquency rates than Spain. Meanwhile, powerful and very strong economies such as Germany and Denmark have lower rates.
Even so, we insist it’s important to highlight that this is a dynamic phenomenon and rates can fluctuate over time depending on factors such as the economic situation and changes in financial policies. Therefore, it is necessary to closely monitor the evolution of delinquency rates nationally and internationally to take effective measures in its prevention and management.
The ‘Crea y Crece’ Law to combat delinquency in Spain
Returning to Spain’s specific case, in its improvement (up until this last year), the so-called ‘Crea y Crece’ Law. A regulation that, among other things, seeks to reduce delinquency in the national business fabric. Specifically, it came into force in 2013, when the delinquency rate in Spain was soaring, and the results have been notably and positively observed.
At easyap, we have already discussed and explained what the ‘Crea y Crece’ Law is. Likewise, this regulation aims to foster economic growth and job creation in Spain. To achieve this, it is key to end delinquency, which is why this law includes a series of regulatory and fiscal measures that primarily provide three benefits:
– Improved access to credit allowing Spanish companies to access a greater volume of credit. This, in turn, boosts economic growth and reduces delinquency.
– Simplification of debt restructuring processes. The law makes it easier for companies to restructure their debt.
– Implementation of mandatory electronic invoicing. This measure achieves better traceability of fiscal operations, both for companies and for authorities.
With these types of policies, the percentage has been reduced, as shown by the late payment data. However, companies have also been able to benefit from other advantages. For instance, the convenience of electronic invoicing.
easyap’s role in fighting late payments
In this regard, at easyap, we have seen how many companies have optimized their invoicing processes. And not only that, but they currently have no problems declaring their taxes.
Whether for convenience or due to legal obligations, having electronic invoicing solutions like those we develop at easyap is practically a necessity for every business. If you haven’t yet taken this step towards digital transformation, we encourage you to do so. In fact, here we tell you about the changes for 2023 regarding corporate invoicing.
With our solution, you will be able to enjoy the following advantages:
– Reduce tax risks with an optimized storage system and a very useful tax information service.
– Enjoy greater security and agility when issuing and receiving electronic invoices.
– Improve the experience of your clients and suppliers who can conveniently check the status of their invoices. Cycles are shorter.
– Save on costs by eliminating printing and postage costs and by increasing productivity.
– Automate accounting for issued invoices and register them electronically.
And, as expected, with a solution like easyap’s, you comply with everything required by the aforementioned Crea y Crece Law. If you want to know more about this regulation and how to comply with it using good software, you just have to contact us. We will be happy to meet you and help you.
