Commercial Debt Statistics: Facts and Numbers

To gain insights into this aspect, we conducted an in-depth analysis of our client database spanning from 2021 to 2023. Additionally, we incorporated open-source statistics from reputable companies to offer a nuanced perspective on the current state of commercial debt.

This article aims to present a comprehensive overview of the prevailing commercial debt landscape, providing valuable information for all stakeholders. Such insights are particularly crucial for navigating the economic uncertainties that may arise alongside fluctuations in commercial debt.

The motivation behind generating these statistics arose from the absence of an updated source that combines information from multiple reputable sources, providing a global understanding of commercial debt.

The Distribution of Commercial Debt Across Countries

The provided text presents the percentage distribution of debtors across various countries based on Payfor’s database analysis, with the United Kingdom (UK), the United States (USA), and the United Arab Emirates (UAE) being among the notable entries. The percentages represent the proportion of commercial debt businesses hold in each respective country.

1.Top Countries in Commercial Debt:

• The USA has the highest percentage of commercial debt among the listed countries, indicating a significant reliance on debt within its business landscape (24.68%).
• The UK follows closely, with a substantial share of commercial debt (18.83%).
• France also stands out with a notable percentage (6.36%).

2.Middle Range Countries:

• Several countries, including Germany, Spain, and Switzerland, fall within the 2-4% range, suggesting a moderate level of commercial debt.

3.Low Commercial Debt Countries:

• Many countries, such as Hong Kong, Poland, Bulgaria, and others, have relatively low percentages (below 2%), implying a lower reliance on commercial debt.

For businesses in countries with high percentages (e.g., USA, UK, France), there may be a greater need for effective business debt strategies to mitigate financial risks.

Countries With a Higher Percentage of Business Creditors

Regarding implications for businesses, a higher percentage of creditors from a particular country may suggest more significant economic activity and business engagements in that region. Conversely, a lower rate may indicate a less significant economic presence.

Countries with higher percentages may be considered more attractive for international business relationships due to the larger number of creditors. On the other hand, those with lower percentages may present challenges regarding business opportunities.

Derived from our clients' database (the analysis covered clients from 2021 to 2023), and after conducting a comprehensive examination, we have identified the following:

United Kingdom (% of total creditors: ~31%): The UK has the highest number of creditors, constituting a significant portion of the overall distribution. This indicates a substantial engagement with creditors and a robust financial ecosystem.

Ukraine (% of total creditors: ~9%): Following the UK, Ukraine holds a notable percentage of creditors, showcasing a considerable involvement in credit relationships. However, it is significantly lower than the UK.

United States (% of total creditors: ~8%): The USA also has a substantial presence among creditors, contributing to a noteworthy portion of the overall distribution. It stands as one of the key players in credit engagements.

Belarus, UAE, Germany, Hong Kong, India, Poland (% of total creditors: ~2-4% each): These countries exhibit a moderate level of participation in credit relationships, with a relatively balanced distribution among them.

Estonia, Malaysia, and Portugal (% of total creditors: ~1-2% each): These countries have a lower but still noticeable representation in the creditor landscape, indicating a degree of involvement in credit transactions.

Bulgaria, Latvia, Isle of Man, Israel, Lithuania, Singapore, Sweden, Turkey, Saudi Arabia, The Cayman Islands, and Australia (% of total creditors: ~<1% each): These countries contribute minimally to the overall creditor count, suggesting a lesser degree of engagement in credit-based activities. 

It's important to note that this analysis does not consider individual business creditors' size or financial strength, focusing solely on the distribution across countries based on the number of creditors.

General Commercial Debt Collection Statistics

As of February 2023, Toyota, the Japanese automotive giant, held the unenviable position of being the company with the most substantial global debt, reaching a staggering 217 billion U.S. dollars. Trailing closely behind was the Chinese real estate player Evergrande, ranking second with a substantial debt of approximately 170 billion U.S. dollars. Volkswagen secured the third position in this less-than-desirable list.

Source (statista.com)

As of the conclusion of 2020, the cumulative debt held by non-financial businesses in the United States stood at approximately US$17.7 trillion. From 2010 to 2019, there was a consistent annual growth rate of 5.5% in debt. However, in the year 2020, this growth experienced a significant surge, reaching 9.1%. 

Source (www2.deloitte.com)

In the second quarter of 2023, the United States witnessed a debt-to-equity ratio of 79 percent. 

Source (statista.com) 

As of the first quarter of 2023, non-financial companies' debt reached a staggering 90 trillion U.S. dollars globally. Notably, this figure surpassed the total value of the global GDP for the first time in 2020, a phenomenon triggered by the onset of the COVID-19 pandemic. A noteworthy observation is that companies based in emerging markets hold approximately 45 percent of this substantial debt. This percentage has been consistently upward over the past few decades.

Source (statista.com)

The information technology, communication services, and healthcare sectors in the United States have been at the forefront of debt growth since 2010. Notably, the average annual increase in long-term debt from 2010 to 2019 for information technology stood at 20.1%, while communication services experienced a growth rate of 13.4%. In addition, these sectors continued accumulating debt despite the challenges posed by the pandemic.

Conversely, there has been a decline in the share of long-term debt in industrials and utilities, aligning with their relative contribution to the broader economy. However, 2020 brought a shift in this trend, with industrials taking the lead in debt growth, experiencing a notable 24.9% increase.

Source (www2.deloitte.com)

Disparities in the incidence of insolvencies among nations can be attributed to various economic, institutional, and legal factors. 

• As of 2023, France was anticipated to experience the highest number of business insolvencies globally, totalling nearly 60,000 for that year. 
• China has recently witnessed a substantial surge in business insolvencies, soaring almost fourfold since 2015 to 12,000 in 2022. This escalation is not only a consequence of the mounting corporate debt in China during this period, but is also indicative of modifications made to bankruptcy procedures. The Chinese bankruptcy code underwent a comprehensive overhaul in 2007, and specialised courts for bankruptcy proceedings were established between 2007 and 2017. Moreover, the economic repercussions of the COVID-19 pandemic have further fuelled the surge in insolvencies.

Source (statista.com)

Small Business Debts Global Statistics

Based on findings from a 2021 survey, it was revealed that 17% of small and medium-sized enterprises (SMEs) in the United States carried debts ranging from $100,000 to $250,000. Concurrently, 26% of SMEs indicated having no outstanding debts.

Source (statista.com)

Analysis from 2022 research indicates that, on average, quarter-on-quarter:

• 52% of businesses faced issues with late payments.
• 25% observed a surge in late payment instances.

The sectors most adversely affected by this trend include education, construction, administrative, professional, scientific, transportation, IT, arts, human health, and social work.

Notably, small businesses situated in the southeast and east of England, as well as Northern Ireland, were more prone to encountering challenges related to delayed payments.

• 37% of businesses sought credit solutions to manage their cash flow.
• Contrary to this, 62% of the people believe businesses typically receive payments within a week.
• A significant 55% of the British people supported implementing additional controls to regulate the payment processes.

Source (fsb.org.uk)

Within the European Union (EU), an average of 1 in every 2 invoices related to commercial transactions faces delayed payments, and in some cases, payments are not made at all. Instances of late payments tend to escalate during periods of economic crises. Small and medium-sized enterprises (SMEs), which heavily depend on consistent and predictable cash flows for their operations, are particularly susceptible to the adverse impacts of delayed payments.

Across Europe, 70% of EU companies have acknowledged that receiving timely payments would enable them to fulfil their own financial obligations to suppliers promptly.

Research shows that a mere one-day reduction in payment delays could augment the aggregated cash flow of EU companies by 0.9%, potentially saving them a substantial €158 million in financing expenses.

Source (ec.europa.eu)

Author: Giles Goodman, Founder CEO of Payfor Limited
Drawing from his solid experience in commercial debt collection, Giles
offers invaluable expertise in solving claims owed between companies worldwide. Through his writing,
Giles shares insights tailored to business owners, leveraging his wealth of experience to provide practical
guidance and support.

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