Late B2B Payments Rise in North America
Monday, July 6, 2020
Cash flows are squeezed as North America feels effect of COVID-19, according to the annual USMCA Payment Practices Barometer, a survey into business-to-business payment behavior throughout the U.S., Mexico and Canada.
Across the region, 43% of the total value of invoices issued were unpaid by the due date, a sharp increase from 25% last year. The value of long overdue invoices (invoices more than 90 days overdue) has doubled. In addition, 4% of the total value of outstanding
invoices has been written off.
Businesses throughout the U.S. reported a 72% year-on-year increase in payment defaults. Individual sectors also revealed signs of economic stress. Mexico’s paper industry, for example, had to write-off 8% of the total value of receivables as
uncollectable. 40% of the total value of B2B invoices in Canada's agri-food and chemicals sectors were overdue.
With all three countries now in recession, the outlook is bleak. Despite this, the majority of businesses surveyed expect growth in the coming months. This optimism was grounded in the belief that banks will continue to provide credit and will cushion
the effects of poor cash flow.
In addition, the majority of businesses polled plan on tightening their credit control procedures. They reported that this will involve outsourced risk management, such as credit insurance, together with in-house techniques including reducing risk concentrations
and an increasing debt collection resources.
Andreas Tesch, Chief Market Officer of Atradius, said: “The 2020 Atradius Payment Practice Barometer for the USA, Mexico and Canada is a particularly revealing story of two halves,” said Andreas Tesch, Atradius chief market officer.
“On one half are the dramatic increase in overdue payments and the undeniable indications that the region has entered recession. On the other is the optimism for a brighter future, despite the gloomy figures to date. Of course, both hang on the development
of the COVID-19 crisis and the effectiveness of the region in reversing its negative effects.”
View the survey results.