According to the Informa D&B Payment Behaviour study (12th edition, 2026), only 20.2% of companies in Portugal pay within the agreed terms. Out of 37 countries analysed, Portugal ranks second to last, ahead only of Bulgaria. In the European Union at the end of 2025, 52% of companies paid on time. The gap is 32 points, the widest ever recorded.
For an SME, this is not an abstract statistic. It is the reason why a business with healthy revenue and a good margin can, in any given month, find itself unable to pay wages. I often see owners look at the profit and loss account and feel reassured, while the real problem sits on the balance sheet, under trade receivables. Profit is an opinion; cash in the bank is a fact.
How companies in Portugal pay
The same Informa D&B study breaks down payment behaviour in 2026:
- 20.2% pay on time.
- 65.2% pay up to 30 days late.
- 9% pay between 30 and 90 days late.
- 5.6% pay more than 90 days late.
There are also significant differences by size and sector. Among large companies, only 4% pay on time. In accommodation and food services, the average delay is 30 days and only 11% of companies pay on time. Wholesale trade has the shortest average delay, at 19 days.
The figure for large companies deserves attention. Many SMEs are proud to have a big customer, and rightly so. But if that customer consistently pays late, the SME is, in practice, financing it.
The hidden cost of late payment
Picture a hypothetical business turning over 100 thousand euros a month whose customers pay, on average, 30 days after the due date. That business permanently has around 100 thousand euros more tied up in receivables than it would if everyone paid on time. That money has to come from somewhere: from equity, from bank credit or from paying its own suppliers late. That is how the problem spreads through the economy.
The effects on an SME are predictable:
- Reliance on short term credit, with interest eating into margin.
- Late payments to suppliers, which damage relationships and trading terms.
- Investment decisions postponed, even when the business is profitable.
- The owner's time spent chasing customers instead of selling or improving the business.
A cash flow system in five parts
Protecting cash flow does not depend on luck or on customers' goodwill. It depends on a system. As an engineer, I like to think of it as a circuit with several valves, each controlling part of the flow of money.
1. Credit rules before the sale
Set out in writing which customers are entitled to payment terms and what credit limit each one has. New customers start with short terms or payment in advance. Terms are extended on the strength of track record, not promises.
2. Clear terms in the proposal
Payment terms, deposits and the consequences of late payment belong in the proposal and the contract, not in a conversation. For long projects, invoicing in stages or asking for a deposit completely changes the cash profile.
3. Invoice on the same day
Many businesses are slow to invoice and then complain that customers are slow to pay. Every day between delivery and invoice is a day of credit given away. The rule should be simple: delivered, invoiced.
4. A collections process with fixed dates
Collections should not depend on anyone's mood. A simple process works like this: a friendly reminder five days before the due date, a call the day after it falls due, a second contact after 15 days, and escalation to the account manager after 30 days. With a named owner and a record of every contact.
5. Weekly indicators
Track every week the average collection period, the amount of overdue debt and the 13 week cash flow forecast. These three numbers say more about a company's health than many sets of financial statements.
A cash flow protection checklist
- Do I know my current average collection period?
- Have I set credit limits for each customer?
- Do I invoice on the day of delivery or on completion of each stage?
- Is there one person responsible for collections, with a written process?
- Does any single customer hold a share of overdue debt that would keep me awake at night?
- Do I have an up to date 13 week cash flow forecast?
In ActionCOACH's 5 Ways to increase profit, margin is one of the five levers. Poorly managed cash flow quietly destroys margin through interest, forced discounts and missed opportunities. Protecting collections means protecting profit.
This week's action
Ask your accountant, or pull from your software, the list of customers with overdue invoices, sorted by value. Pick the five largest and decide, for each one, who will make contact, when and with what proposal. Then write on one page the collections process you want followed from now on. Within two weeks you will see the difference in your bank balance.
If you would like to review how your business manages its cash, the ActionCOACH Porto team is available for a conversation. In 1:1 Coaching we work with owners so that growth comes with healthy, predictable cash flow.