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Payment delays edge upward in Western Europe PDF Print E-mail
Thursday, 13 April 2017
Nine out of 10 businesses in Western Europe have experienced payment delays on domestic and foreign B2B invoices in the past year.

A new report from leading credit insurer Atradius highlights that 41% of the total value of sales have been hit by payment delays – an increase from the 39% reported a year ago. Buyers are taking longer to pay and this is having a knock on effect on the number of sales being made on credit as businesses strive to protect their cashflow.

Across Western Europe, domestic buyers are taking 59 days to pay invoices – five days longer than three years ago; while foreign buyers typically pay within 53 days. However, only 35% of foreign invoices, compared to 43% of domestic transactions are offered on credit terms suggesting a higher level of comfort in domestic trade, despite slower payment expectations. Insufficient availability of funds was the main reason for late payment (44% of cases).

Richard Reynolds, of Atradius commented: “With traditional financing more difficult to access in recent years, buyers have more been more aggressive in using supplier invoices as bridge financing. However, with margins and cash flow pressure mounting for suppliers, reducing credit sales is sometimes the only option they feel is available to them to regain control of their finances. While this may be prudent in cases where buyer creditworthiness is deteriorating, insured customers have the advantage of being able to explore other options for improving their credit portfolio that may open profitable new opportunities.”

Mr Reynolds concluded: “One of the most telling outcomes of this study is that for many companies, domestic sales generate a substantial share of their uncollectable receivables. Therefore, it’s just as important to protect your business from domestic defaults as it is from foreign payment defaults. At Atradius we are helping businesses manage their credit risks in smarter, more effective ways. As a result, we are seeing increased use of our credit management services resulting in improved performance when selling on credit.”

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