Payment collection period in Malta

The Average DSO – Days Sales Outstanding or as also referred to ‘the payment collection ratio’ across all the Maltese business sectors as at 31 December 2016 was 89.04 days.

This figure was derived from a survey conducted by The Malta Association of Credit Management amongst its members. MACM represents suppliers selling on credit in Malta and other creditors hailing from all sectors of the Maltese economy.

The DSO figures for specific industries and sectors were also issued and communicated to the respective MACM Members who participated in this important exercise.

MACM notes with that there has been a marginal improvement of 2.63 days compared to last year’s DSO figure. However, a DSO of 89.04 days is still relatively high when compared to the average DSO of other European countries. In fact, the average DSO for Malta comes very close to that of Italy (80 days) according to the European Payment Index issued recently by Intrum Justitia.

Nevertheless, the improvement in the DSO figure indicates an overall improvement in the cash flow that may also have a positive effect on the investment potential of the Maltese business community.

Accounts Receivable, or as they are commonly known ‘Debtors’, represent on average about 40% of the total assets within the balance sheet of most firms, which assets are deemed liquid. Consequently, an improvement in the DSO would not only improve the credit worthiness of firms but also releases financial resources that could be directed to further investment.