Atradius Barometer Reveals Payment Practices of Eastern European Businesses

Less businesses in Eastern Europe are offering credit to customers, a report by trade credit insurer Atradius has found.

The 2018 edition of the Atradius Payment Practices Barometer for Eastern Europe, reports that the proportion of B2B credit sales in Eastern Europe has decreased from an average of 40.3% in 2017 to 36.9% this year.

Businesses in Hungary remain the most inclined to offer credit terms with an average of 57.6% of B2B sales made on credit, although here too, credit sales are at a lower level than a year ago. In contrast, businesses in Romania seem to be the least willing to offer credit terms with an average of just 17.7% of B2B sales transacted on credit.

The strongest reasons for offering credit to overseas customers are described by Eastern European companies as building trust and relationships and attracting new customers. When it came to refusing credit sales, 24.1% cited high currency risk and 19.0% because there was high economic and/or political risk in the customer’s country.

 Stay Updated To Save Money & Time. Join Our Free Newsletter 
. Indepth Analysis & Opinion       . Interviews      . Exclusive Reports  
. Free Digital Magazines      News & updates      . Event Invitations 
                     
& Much More Delivered To Your Inbox For Free.
Submit
We Will Not Spam, Rent, or Sell Your Information.
All emails include an unsubscribe link. You may opt-out at any time. See our privacy policy.

 

The Eastern Europe Payment Practices Barometer, which surveys suppliers across Bulgaria, Czech Republic, Hungary, Poland, Romania, Slovakia and Turkey, is one of a suite of reports and publications by Atradius designed to give businesses trading insights into the markets or sectors relevant to their business. Positively, businesses in Eastern Europe reported a slight fall in frequent payment delays, down 3% to 81% in 2018 compared to 2017. However, such delays did impact on businesses with 18% reporting the need to postpone payments to suppliers while 14% experienced revenue loss. Just under 1% of B2B debt was reported to be uncollectable. Meanwhile, a quarter of businesses in Eastern Europe expect an increase in Days Sales Outstanding (DSO) over the coming 12 months.

Payment delays due to insufficient availability of funds by domestic B2B customers in Eastern Europe increased markedly with 68.8% of respondents identifying the issue, an increase of over 10%  from the previous year. Nearly a third (31%) of respondents reported that domestic B2B customers pay invoices late because they use outstanding invoices as a form of financing. Moreover, domestic B2B receivables were reported to be uncollectable most often due to the customer being bankrupt or out of business (64.2% of respondents, up from 55.8% last year). However, many Eastern European respondents invoicing electronically, have noticed an improvement in speed of payment. Two thirds (66%) of respondents invoiced their B2B customers online over the past year.

The report predicts an increase in trade credit risk in Eastern Europe as GDP growth eases. While Eastern Europe is forecast to grow a steady 3% this year, mainly due to robust domestic demand, strong momentum is forecast to ease to 2.5% in 2019, as regional GDP growth eases and the export trade stimulus from the Eurozone cools off. This, along with a longer DSO, is forecast to weigh on liquidity, potentially triggering an increase in trade credit risk.

Andreas Tesch, Chief Market Officer of Atradius, commented: “Globally, 2018 promises to be another year of strong growth, with global GDP growth pushing up to 3.2%, the highest level since 2011. However, the chances of long-term economic growth are deteriorating for the export-oriented economies of Eastern Europe, which are closely ingrained in European supply chains. A slowdown of the global economy may expose some structural issues, peculiar to Eastern European economies, weighing on their growth. This could trigger an increase in trade credit risk. Against this backdrop, it is essential to pay close attention to the payment behaviour of buyers and limit payment default risks through credit insurance protection. This can enable businesses trading with Eastern Europe to expand growth opportunities, improve cash flow and protect profitability.”

The complete report highlighting all findings of the September 2018 edition of the Atradius Payment Practices Barometer for Eastern Europe can be downloaded from the Atradius website at https://atradius.co.uk (Publications section).

 Stay Updated To Save Money & Time. Join Our Free Newsletter 
. Indepth Analysis & Opinion       . Interviews      . Exclusive Reports  
. Free Digital Magazines      News & updates      . Event Invitations 
                     
& Much More Delivered To Your Inbox For Free.
Submit
We Will Not Spam, Rent, or Sell Your Information.
All emails include an unsubscribe link. You may opt-out at any time. See our privacy policy.

 
Close
Stay Updated To Save Money & Time. Join Our Free Newsletter. 
. Indepth Analysis & Opinion       Interviews          . Exclusive Reports 
. Free Digital Magazines        . News & updates        . Event Invitations
& Much More Delivered To Your Inbox For Free. 
Submit
We Will Not Spam, Rent, or Sell Your Information.
All emails include an unsubscribe link. You may opt-out at any time. See our privacy policy.
 
Close