Late Payment Problems Grow in Western Europe
Sunday, November 4, 2018
Although still positive, growth of Western European economies is forecast to slow to 1.7 percent in 2019 from 2 percent in 2018. With Brexit and protectionist measures, largely by the U.S., adding stress in export markets businesses are already starting to experience an increased negative impact from late payment of invoices.
In the October 2018 edition of the Atradius Payment Practices Barometer for Western Europe, a survey based on feedback from approximately 3,000 domestic and export suppliers from 13 countries (Austria, Belgium, Denmark, France, Germany, Great Britain, Greece, Ireland, Italy, Spain, Sweden, Switzerland and the Netherlands) more respondents than last year (58 percent, up from 56 percent one year ago) reported having experienced financial distress on their business due to late payment by their B2B customers.
On average, nearly 42 percent of the total value of B2B receivables of the Western European businesses surveyed was paid late. This compares to 41 percent one year ago. Domestically, suppliers surveyed in Italy and Greece were the hardest hit (on average, nearly half of the total value of their B2B invoices were overdue).
The hardest hit by late payment from foreign customers were respondents in Great Britain and France (53 percent of the total value of British, and 51 percent of French export sales on credit were reported to have been unpaid by the due date). Late payment from B2B customers is reflected in a longer DSO, which may adversely impact businesses’ liquidity, increasing B2B trade credit risk. Based on the Atradius survey, over the past year the biggest increases in DSO were recorded in the Netherlands (46 days, up from 41 days) and Great Britain (35 days, up from 31 days).
The Atradius Payment Practices Barometer for Western Europe also reports businesses’ opinions about the biggest risks to global economic growth in the coming six months. 45 percent said that US protectionism turning into a trade war is the most likely to dampen economic growth in the upcoming six months. By country, the highest percentage of respondents believing that US protectionism may trigger a global trade war that hampers global growth was recorded in Denmark (60 percent).