Payment practices hold steady in Eastern Europe
The Atradius Payment Practices Barometer Survey Results for Eastern Europe paint a promising picture of businesses that have maintained the status-quo, despite the challenges faced during the second year of the pandemic. Key metrics, including the percentage of write-offs and total volume of overdue B2B invoices, show little year-on-year change. Write-offs averaged 5% of B2B invoices’ total value this year, the same as last year. This contrasts with the survey results for Western Europe, where write-offs increased from 7% to 10% of B2B invoices’ total value.
Overall, business confidence in Eastern Europe is strong. 73% of the region anticipates growth next year, with stand-out results seen in Slovakia and the Czech Republic where businesses predict growth of 87% and 84% respectively. However, this buoyant mood is tempered by downside risks. Insolvency risk is likely to rise in 2022. While this risk is highest in Italy and UK, bad debt risks are also higher for businesses that trade with these markets.
Thomas Langen, Atradius Senior Regional Director Germany, Central and Eastern Europe acknowledged these increased risks when he said: “Businesses, especially those involved in export and international trade, would be well advised to take steps to protect their accounts receivable from the risk of non-payment now, before we enter the more challenging insolvency conditions anticipated in 2022.”
The withdrawal of Covid-19 government fiscal support is the main driver of the increased credit risks. Uncertainty over the evolution of the pandemic and, in particular the threat of future waves caused by new variants, also poses a downside risk.
The pandemic has resulted in many businesses adopting digitalisation (57% of the region reported this) and adapting to changes in customer demand and supply chains (39% of respondent alike). 51% said they had enabled remote working.