Payment delays expected to increase in North America

Press release

International trade policies/disputes and a rise in insolvencies expected to negatively impact B2B payment behaviour

33% of suppliers interviewed in the USA, 34% in Canada and 40% in Mexico expect an increase in the number of customers who delay payment more than 90 days and with it problems managing cash flow and DSO. In the USA, 83% of respondents in the metals sector, 40% in the construction sector and 33% in the ICT/electronics sector anticipate this deterioration in payment behaviour. In Canada, this is the case for 3 in 5 respondents in the construction industry. In Mexico, 64% of suppliers interviewed in the machines sector and 54% in both the consumer durables and construction sectors anticipate an increase in the time it takes to collect overdue B2B receivables. These are among the findings of the latest Atradius Payment Practices Barometer. 

David Huey, Atradius Regional Director for the U.S., Canada and Mexico commented: “After ten consecutive years of decreasing insolvencies, payment delays in North America are expected to increase over the coming months. This is a clear reversal from last year. It is chiefly due to the regularly changing government trade policies and slowdown of the global economy. In addition to casting a dark cloud over the insolvency outlook, they are putting a heavy strain on global trade. This exposes North American businesses more to the risk of payment defaults from B2B customers. Effectively managing payment defaults is one of the keys to business longevity. In this regard, credit insurance remains the most effective tool for securely building a business”. 

With more customers expected to take longer to pay and a worsening economic outlook, Atradius survey respondents are also planning to do more to protect their cash flow. 38% of respondents in Mexico, 35% in the U.S. and 30% in Canada plan on more frequently checking their buyers’ creditworthiness before offering credit terms. 33% of Canadian respondents, 28% in the U.S. and 18% in Mexico plan to increase their bad debts reserves.

The Atradius Payment Practices Barometer is an annual survey of B2B payment practices conducted by Atradius N.V. The Americas edition examines payment behaviour in Brazil, Canada, Mexico and the USA. This year’s survey was conducted approximately six months after the conclusion of the USMCA trade deal.

Survey results are particularly telling for USMCA countries as more than half of the exports of 56% of the suppliers interviewed in the three countries are within the USMCA region. And 18.3% of respondents (up from 16.5% one year ago) trade only within the region. While it may still be early to draw conclusions, USMCA appears to be good for trade. For 87% of the suppliers interviewed in Mexico (up from 81.5% last year) and 92% in Canada (up from 90% one year ago) exports to the USA have either increased or not changed over the past year. 7 of 10 suppliers interviewed pointed to both economic reasons and government trade policies for the renewed stability. 

Disclaimer

The statements made herein are provided solely for general informational purposes and should not be relied upon for any purpose. Please refer to the actual policy or the relevant product or services agreement for the governing terms. Nothing herein should be construed to create any right, obligation, advice or responsibility on the part of Atradius, including any obligation to conduct due diligence of buyers or on your behalf. If Atradius does conduct due diligence on any buyer it is for its own underwriting purposes and not for the benefit of the insured or any other person. Additionally, in no event shall Atradius and its related, affiliated and subsidiary companies be liable for any direct, indirect, special, incidental, or consequential damages arising out of the use of the statements made information herein.