Payment delays edging upward in Western Europe

9 of 10 businesses surveyed by Atradius in Western Europe have experienced payment delays on domestic and foreign B2B invoices impacting, on average, 41% of the total value of B2B receivables (up from 39% a year ago). This increase comes at a time when buyers are also taking longer to pay invoices. As a result, we see a reduction of about 2 percentage points in sales made on credit.

On average, domestic buyers are paying in 59 days up from 54 days in 2014 and foreign buyers in 53 days one day slower than in 2014. With 35.1% of foreign and 42.6% of domestic invoices reflecting credit terms survey respondents demonstrated a higher level of comfort and trust in domestic buyers despite the slower payment. 43.5% of the survey respondents cited insufficient availability of funds as a reason why buyers pay late and 26.1% said that buyers are using invoices as alternative financing. 24.4% of the survey respondents said their buyers found the payment procedure too complex. While the first two factors were more often the case in domestic transactions, the latter was more prevalent with foreign buyers.

Andreas Tesch Chief Market Officer of Atradius N.V. commented, “With traditional financing more difficult to access in recent years buyers have more been more aggressive in using supplier invoices as bridge financing. However with margins and cash flow pressure mounting for suppliers, reducing credit sales is sometimes the only option they feel is available to them to regain control of their finances. This is a good practice in cases where buyer creditworthiness is deteriorating, however in other cases ‘Insights’ into other options for improving your credit portfolio may open profitable new opportunities.” 

With no significant improvement in the insolvency picture across Europe, we have also seen no meaningful improvement in the cost of uncollectable invoices (1.3% of the total value of respondents’ invoices compared to 1.4% in 2016 survey). Most respondents appear resigned to this level of financial loss. More than 60% of respondents have no intention of adjusting their usual credit management practices this year even with Brexit, more protectionist measures from the US and a slowdown in China on the horizon.

Tesch concluded, “One of the most telling outcomes of this study is that for many companies domestic sales, generate a substantial share of their uncollectable receivables. It’s just as important to protect your business from domestic defaults as it is from foreign payment defaults. At Atradius we are helping businesses manage their credit risks in smarter, more effective ways. As a result, we are seeing increased use of our credit management services resulting in improved performance when selling on credit.” 

About the Atradius Payment Practices Barometer
The Atradius Payment Practices Barometer survey is undertaken annually covering four regions across the globe, Western Europe, Eastern Europe, the Americas, and Asia Pacific.  It measures payment practices and behaviour of B2B businesses. 2,769 B2B companies  participated in the Western Europe survey.