Germany’s economy is in a deep crisis, according to the Federation of German Industries (BDI), with the country heading towards three years of declining growth for the first time since the nation’s reunification in the 1990s. In the final quarter of 2024, the German economy shrank by 0.2% according to CNBC, with the GDP expected decrease by 0.1% during the same three-month period.

Germany’s statistics office, Destatis, said that while household and government consumption expenditures increased, exports lowered significantly compared to the previous quarter. In the report released Thursday, Destatis wrote that “after a year marked by economic and structural challenges, the German economy thus ended 2024 in negative territory.”

The abysmal quarter follows a third quarter that saw a 0.1% rise in the country’s GDP. According to CNBC, the German economy contracted on an annual basis, in both 2023 and 2024, by 0.3% and 0.2% respectively. While Germany’s economy has been sluggish over the last few years, it has avoided a recession.

The country lags behind the rest of the Eurozone, according to Reuters, which will grow by 1.1% along with a 3.2% boost to the global economy over the same period. The BDI attributes these lags to a lack of growth in German industry.

“The situation is very serious: Growth in industry in particular has suffered a structural break,” BDI President Peter Leibinger said. “…Public investment in modern infrastructure, in the transformation and the resilience of our economy, is urgently needed.”

Germany’s Finance Minister Jörg Kukies sees this economic turmoil stemming from something much deeper than a fraught industrial sector. “The structural weaknesses of our economy absolutely have to be addressed,” said Kukies. “It’s really important that we embark on a path of economic growth.”

With such a dire economic outlook, Leibinger said a change in leadership could bolster the nation’s economy. With a federal election slated for Feb. 23, a newer stronger leadership could be on the horizon for Germany. Whether or not the country will be able to reverse course and fix the economy, especially considering United States President Donald Trump’s looming threat of tariffs, remains to be seen.

Among credit managers with accounts in Germany, 88% of their sales are to existing customers and 12% are to new customers, according to FCIB’s Credit and Collections survey. On average, those customers are 15 days beyond terms. Of those credit managers, 44% extend 1–30-day payment terms to their German customers and 38% offer 31–60-day terms. A slim 6% of credit managers do not extend credit to customer in Germany.

Credit managers have seen no stark increase in payment delays, with 67% saying that delays have stayed the same and 20% not experiencing any delays. However, 13% believe these payment delays are increasing. Cash flow issues are the most common cause of delays, according to 51% of credit managers. This is followed by billing disputes, customer payment policy and cultural norms, which each represented 36% of delays, respectively.

About 75% of customers preferred to pay through wire transfer, making it the predominant payment method followed by electronic fund transfers (EFT) which was common among 38% of customers.

One survey respondent advised fellow credit managers to, “check with the customer immediately if the invoice is received and there are no disputes.” Another survey respondent wrote, “It is important to know a customer’s payment process to avoid misunderstandings or delays due to administrative issues.”