Recovery from the pandemic, the ongoing crisis in Ukraine and high import and rising costs are all factors resulting in a greater shift in credit requests. The Malta Business Weekly speaks to JOSEF BUSUTTIL, Director General, Malta Association of Credit Management (MACM). MACM represents suppliers selling on credit in Malta and other creditors hailing from all sectors of the Maltese economy.
“Certainly, we can expect this to affect the business community, as banks are treading very cautiously when it comes to lending; we will see buyers looking for credit from trade suppliers and other means of borrowing. Businesses need to proceed with caution to mitigate risks. After all, we know credit costs money.”
Busuttil explained the current scenario: “At present, we already see interesting shifts in patterns. In a recent survey at MACM, we identified the Average DSO – Days Sales Outstanding, also referred to as ‘the payment collection ratio’ across all the Maltese business sectors as of 31 December 2021, was 84.60 days. MACM notes that there has been an increase of 4.92 days compared to the previous year’s DSO figure, which stood at 79.68 days. It must be noted that a DSO of 84.60 days is still relatively high when compared to the average DSO of other European countries, which reads 52 days for B2B, 31 days for B2C and 62 days for the Public sector (Intrum Justitia Late Payment Report – 2022).
“I believe advances in technology, such as digital payment solutions, will be integral for ensuring suppliers are paid in a timely manner. Unfortunately, we are still experiencing issues with a heavy cheque and cash dependency here in Malta. One key way to help our creditors in the business community is by encouraging them to continue thorough due diligence and KYC checks.”
On the subject of how can businesses help reduce the risks associated with lending, Busuttil continued: “At MACM, we have recently announced a strategic partnership with Infocredit Group, a leading provider of business intelligence and innovative risk management solutions. This partnership is equipping MACM with an additional service offering for Maltese businesses.”
The Infocredit World Platform is designed to provide access to the members of the MACM network, allowing them to search Corporate Data for more than 200 million companies worldwide and order an investigation report at preferential prices.
MACM and Infocredit Group will provide high-quality and cost-effective credit and compliance solutions using the latest cutting-edge technologies through a shared common vision. As a result, local businesses dealing with foreign suppliers and clients will be able to purchase International Credit Reports on companies registered anywhere in the world. These reports can assist Maltese businesses in trading diligently and securely with foreign companies, as they can provide sufficient, accurate and reliable data for confident decision-making and strategic thinking.
“This step is a landmark for our entity. The Maltese business community will also be able to comply with AML regulations and gain access to comprehensive KYC and Enhanced Due Diligence reports. These reports will offer critical insight and analysis to assist members in leveraging their money-laundering risks during client onboarding or before entering new business relationships. Additionally, certificates and official documents can also be obtained,” concluded Busuttil.
The MACM, set up in 2001, is a member-owned, not-for-profit organisation made up of Maltese organisations hailing from different sectors of the Maltese economy. Today, MACM represents a substantial share of the Maltese economy. Moreover, the major players in the various Maltese industries are members of MACM. The mission of MACM is achieved by several actions, including fostering and facilitating the exchange of credit information; encouraging efficient service in the collection of amounts due; disseminating valuable and instructive articles and ideas concerning credit management techniques; promoting economy and efficiency in the handling of estates of insolvent, distressed or bankrupt debtors; promoting, supporting or opposing any legislative or other measures which impact the aforesaid interests represented in these and other developments.