With Brexit and protectionist measures, largely by the US, adding stress in export markets, businesses are already starting to experience an increased negative impact from late payment of invoices.
The latest Atradius Payment Practices Barometer for Western Europe indicates a rise in late payments across Europe.
Of the 3,000 domestic and import suppliers questioned across Austria, Belgium, Denmark, France, Germany, the UK, Greece, Ireland, Italy, Spain, Sweden, Switzerland and the Netherlands, 58% reported increased financial pressures on their businesses as a result of late payments by B2B customers. Last year the figure stood at 56%.
Almost 42% of the total value of B2B receivables was paid late, compared with 41% a year ago. Suppliers in Italy and Greece reported the biggest domestic impact, citing late payments of almost 50%.
Companies in the UK and France reported the highest levels of late payments from foreign customers – 53% of the total value of British and 51% of French export sales on credit were reported to have been unpaid by the due date.
Late payment from B2B customers is reflected in a longer days sales outstanding (DSO), which can adversely impact businesses’ liquidity, resulting in increased B2B trade credit risk. Over the past year, the biggest increases in DSO were recorded in the Netherlands (46 days, up from 41 days) and the UK (35 days, up from 31 days).
The survey also highlighted businesses’ opinions about the biggest risks to global economic growth in the coming six months. Of the companies questioned, 45% said that the risk of US protectionism turning into a trade war is the most likely to dampen economic growth in the upcoming six months.
By country, the highest percentage of respondents believing that US protectionism may trigger a global trade war that hampers global growth was recorded in Denmark (60%).
Andreas Tesch, chief market officer of Atradius N.V. commented: “The outlook for global growth is forecast to lose steam, warranting a more cautious outlook for 2019. This will likely put the brakes on the downward trend in global insolvencies with only a 1% decline forecast for next year.
“All this points to deterioration of the worldwide outlook for trade credit risk on the horizon. Protection of receivables is, therefore, of paramount importance for businesses. Credit insurance enables businesses to manage the inevitable risks of selling on credit, and can help them grasp growth opportunities through safe and profitable trade.”
The complete report highlighting all findings of the October 2018 edition of the Atradius Payment Practices Barometer for Western Europe can be downloaded here.