Corporate Finance, DeFi, Blockchain, Web3 News
Corporate Finance, DeFi, Blockchain News

More Than 1/3 of the Total Value of Invoices Unpaid After 90 Days is Uncollected

According to survey respondents in Western Europe of the Atradius Payment Practices Barometer, on average, 37.6% of the total value of their B2B receivables was defaulted on with 4.9% remaining unpaid after 90 days past due. On average, 1.7% of the B2B invoices of survey respondents were written off as uncollectable. Resulting in approximately 35% of the total value of the receivables more than 90 days overdue being written off as uncollectable. These statistics highlight the importance of receivables management. Respondents from Turkey, Spain, Great Britain and Italy struggled the most with overdue and uncollectable receivables. Respondents from Denmark, Sweden, Austria and surprisingly Greece seemed to have the firmest grip on collecting receivables.

The Atradius survey of B2B payment practices interviewed approximately 3,000 businesses across 14 countries in Western Europe. In addition to payment practices, the survey looks at challenges to profitability, credit management practices and DSO.

While the primary reason for payment delays is insufficient funds (46.6% of survey respondents in respect to domestic and 35.2% in respect to foreign customers), domestic and foreign buyers often delay payment as a source of surrogate financing. This occurs most frequently with domestic customers in Germany (50.3%) for foreign customers in Denmark (42.4%). Insolvency of a domestic buyer was cited by 20.53% of respondents. A complex payment procedure or inefficient banking systems was each noted by about a quarter of respondents in respect to foreign payment delays.

Understanding what the potential reasons for payment delay are and limiting your risk of default or loss can reduce financial losses. 3 out of 5 respondents employ policies that mitigate the risks inherent in offering trade credit to B2B customers. Dunning (payment reminders) and checking the creditworthiness of buyers are used most often (46.2% and 43.3% of respondents respectively).

Despite forecasts of improving economic conditions in many countries, falling demand and cash flow are considered by respondents to be their biggest challenges to profitability this year. Falling demand is of greatest concern in Sweden, Denmark, Turkey and Austria while maintaining adequate cash flow was highest in Greece, Austria, Great Britain and France. On average collecting invoices was considered a big challenge for less than 25% of respondents, but in the Netherlands (33%) and Germany (30%) of respondents considered this their biggest challenge. As a result we see relatively high use of collections agencies in these countries along with Sweden and France.

Andreas Tesch, Chief Market Officer of Atradius N.V. stated, "Survey respondents are wise to continue operating at a high level of risk awareness as payment defaults and insolvencies are unlikely to decline significantly in the near term. While we see insolvencies heading in a positive direction, improvement is expected to be slow with 2014 insolvencies in developed countries remaining 32% above 2007 levels overall. We are anticipating improvement in some key markets like Spain, the Netherlands, Denmark and Ireland, but in most markets our 2014 forecasts are for insolvency levels stabilising, and in many cases at high levels. The insolvency level in the Eurozone for instance is twice as high as in the period before the crisis and in the Eurozone periphery markets more than 3 ½ times higher."

The complete report highlighting the findings of the 2014 edition of the Atradius Payment Practices Barometer for Western Europe can be found in the Publications section of the website.

Les médias du groupe Finyear

Jeudi 15 Mai 2014