Late B2B Customer Payments in Western Europe Cause Ripple Effect
Thursday, April 21, 2016
Approximately 90 percent of the respondents of the latest edition of the Atradius Payment Practices Barometer survey for Western Europe had invoices paid late by their B2B customers over the past year. This resulted in defaults of nearly 40 percent of the total value of B2B receivables on average.
These practices had adverse impacts on respondents in Western Europe, causing financial distress to their business and a ripple effect throughout the whole supply chain:
- Nearly 25 percent of respondents delayed payment to their own suppliers due to late payment from their B2B customers.
- Around 20 percent of respondents alike needed to take specific measures to correct cash flow or lost revenues.
- About 15 percent of respondents alike had to pursue additional financing or request a bank overdraft extension.
Respondents in Italy and Greece were the most adversely affected by late payments by domestic B2B customers (on average, nearly half of the total value of their B2B invoices were defaulted on, which is around 10 percent above the average for Western Europe). Respondents in Great Britain, in contrast, were the hardest hit by late payment from export customers (46.4 percent of the total value of British export credit sales were reported to have been paid late by B2B customers, compared to a 38.3 percent average for Western Europe).
Within the still-challenging insolvency environment, it is no surprise that more respondents in Western Europe in 2016 than last year (57.9 percent, up from 51.4 percent in 2015) reported that late payment of domestic invoices is most often due to customers' insufficient availability of funds. This was most often experienced by respondents in Greece. Similarly, the percentage of respondents in Western Europe reporting late payment on foreign invoices due to this reason increased to 40.2 percent from 37.1 percent last year. This was most often reported by B2B customers in Austria.
The Atradius Payment Practices Barometer survey for Western Europe looks at the payment behaviour of the domestic and foreign B2B customers of approximately 3,000 businesses in 13 countries. The survey casts light on trends in the use of credit management tools, on the perceived challenges to profitability, on DSO and on payment practices by industry and business size. View the full report.