A rise in risk of late payments, says report
BUSINESSES trading with customers in Eastern Europe are being warned to expect a potential increase in payment defaults, reports a new paper by trade credit insurer Atradius.
The Payment Practices Barometer by Atradius, which has its UK headquarters in Cardiff Bay, analyses payment behaviours of businesses with the latest report focusing on Eastern Europe, including the Czech Republic, Hungary, Poland, Slovakia and Turkey.
The report reveals that 86% of Eastern European customers have paid their B2B invoices late over the last year.
And for 58%, the reason was attributable to customers’ liquidity issues – compared to 52% of Western European businesses. The reports highlights Hungary as experiencing the highest number of liquidity-related late payments at 78%.
The Atradius report also found that 45% of the average total value of business to business invoices billed to Eastern European countries remained unpaid after the due date – slightly higher than the 42% average for Western Europe.
On average, 10% of B2B invoices with Eastern European companies became delinquent – unpaid 90+ days after the due date – and 1% written off as uncollectable.
The consensus view among Eastern European businesses is that there will be an overall deterioration in the payment behaviour of their B2B customers over the coming 12 months.
In particular, more respondents (26%) anticipate deterioration rather than improvement (16%).
Richard Reynolds, of Atradius, which protects businesses from the risk of non-payment and advises on the risks and opportunities of where to trade domestically and across the globe, said: “Non-payment is the single biggest risk to a business, squeezing profit margins and placing strain on cashflow, and for companies unable to mitigate against the risks can push a business to the brink.
“It is imperative that companies make it their business to know the financial standing and payment behaviours of their customers and be prepared for the impact of any events or issues in the wider landscape – economic, political and cultural.”