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Atradius Survey Reveals 30% of the Total Value of B2B Receivables Paid Late

Payment delays and payment defaults, along with deterioration of the trade credit risk outlook, continue to be a major issue for businesses in Western Europe. According to survey respondents of the Atradius Payment Practices Barometer, on average, 30% of the total value of B2B receivables was paid late. Of these, 20% extended past two months overdue and 3% was defaulted on. The situation in Greece is the most tenuous with 90 days past due and uncollectable invoices more than twice that of the average for Western Europe. Three times as many survey respondents expect deterioration of trade credit risk over the next six months than expect improvement.

The Atradius survey interviewed 2,886 businesses across 14 countries in Western Europe. Surveyed countries reporting the worst problems with late payments from domestic B2B customers were Greece, with 41.1% of the total value of domestic B2B receivables past due (overall survey average 30%), Italy (39.5%) and Ireland (38.2%). 18.7%, 11.7%, and 6.5% respectively were more than 3 months overdue (overall survey average 6%).

Compared to one year ago, on average, the percentage of sales made on credit, in credit terms or in payment durations have remained relatively unchanged. However, Greece and Turkey, which has been included in the survey for the first time, have shown some extreme outlying results in respect to domestic B2B sales. Greece (66.1%) and Turkey (65.8%) had the second and third highest percentages of domestic sales made on credit. They had the longest domestic credit terms (Turkey average 85 days and Greece average 75 days). And in respect to Greece, the highest percentage of overdue domestic invoices (41%), domestic invoices more than 90 days past due (18.7%) and a percentage of uncollectable domestic invoices (7.4%) that was more than twice that of the survey average (3.5%).

At overall survey level, approximately 3% of domestic B2B invoices resulted in payment default. Survey respondents in Greece reported the highest average payment default rates from B2B customers (7.4% of the total value of domestic B2B receivables was reported as uncollectable). Italy had the second highest average rate of payment default (5.4%).

Consistent with responses in the survey of one year ago, insufficient availability of funds was cited as the primary reason for payment delays from B2B customers (66.8% of respondents reported it as the primary reason for domestic payment delays, 46.2% for foreign payment delays). Over the next six months, liquidity constraints of buyers will likely continue to be the major concern for survey respondents in Western Europe, as three times as many as respondents expect deterioration of trade credit risk than expect improvement.

To reduce payment delays and payment defaults, about 48.6% of the survey respondents in Western Europe anticipate increasing their active credit management, mainly using more frequent creditworthiness checks of buyers, dunning (payment reminders), or requests for secured forms of payment.

Andreas Tesch, Chief Markets Officer of Atradius N.V. stated, "Current economic conditions across Western Europe are precarious. The uncertainties about Greece's future in the Eurozone along with generally soft economic conditions across Europe suggest that we are in for another period of growing insolvencies and payment defaults. The survey results for Greece showing a 7.4% default rate, compared to an average of 3.5% across Western Europe, clearly highlight the heightened risk environment in the country. Default risks in Greece, as well as across Europe, are not expected to decline in the short term. We have to the contrary been seeing a 5% to 10% increase in insolvency risk across the continent. Managing payment default risk is therefore essential to success. Respondents of the Atradius Payment Practices Barometer, for the most part, appear to be aware of the risks they are being faced with and are taking some of the steps important to success in a more difficult business environment. As a credit insurer, Atradius regularly engages in many of the measures reviewed in the survey, to protect the balance sheets of the company but more importantly to ensure the livelihood of our customers. Improving monitoring of payment default risk and taking steps to reduce the chances of being defaulted on are important, but as insolvencies rise so will defaults. When you are faced with payment defaults, insuring against the loss can be your best support."

The complete report highlighting the findings of the 11th edition of the Atradius Payment Practices Barometer can be found in the Publications section of the website.


Lundi 4 Juin 2012