One third of invoices uncollectable

Press release

Amsterdam 14 May 2014 - 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.”

About Atradius
The Atradius Group provides trade credit insurance, surety and collections services worldwide and has a presence through more than 160 offices in 50 countries. Atradius has access to credit information on 100 million companies worldwide. Its products help protect companies throughout the world from payment risks associated with selling products and services on credit.

For further information:
Atradius Corporate Communications
Christine Gerryn
Tel.: +31 20 553 2047
E-mail: christine.gerryn@atradius.com
atradius.com

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.