CCR World Magazine

Amsterdam, 28/06/2012 – Businesses in Eastern Europe express concern over a likely deterioration of the trade credit risk outlook over the next six months, and anticipate intensifying their efforts to protect against payment delays and payment defaults by B2B customers. According to the June Atradius Payment Practices Barometer, more than three times as many survey respondents in Eastern Europe expect deterioration of trade credit risk over the next six months than expect improvement. To reduce payment delays and payment defaults, over half of the survey respondents in Eastern Europe anticipate increasing their active credit management.

The Atradius survey interviewed 820 businesses across 4 countries in Eastern Europe (Czech Republic, Hungary, Poland and Slovakia). 29.0% of the survey respondents expect deterioration of trade credit risk over the next six months while only 9.5% expect improvement. Czech Republic recorded the highest percentage of respondents expecting deterioration of trade credit risk over the next six months (41.2%), followed by Poland (35.1%).

To reduce payment delays and payment defaults, and better protect their businesses against trade credit risk, over half of the survey respondents in Eastern Europe (53.4%) anticipate increasing their active credit management over the next six months, mainly using more frequent dunning (payment reminders) and creditworthiness checks of buyers. Poland and Slovakia (56% of respondents each) displayed the highest percentage of respondents who plan on checking the creditworthiness of their buyers more.  

In these four countries, the instability of the economic climate has already resulted in an average of over 30% of the value of B2B receivables being paid late and about 2% being defaulted on. The primary reason is the buyer’s lack of funds to pay. Slovakia displayed the most problems with overdue domestic receivables (35.7% of the value of domestic B2B receivables was overdue: overall survey average of 31.6%). Respondents in the Czech Republic recorded the highest percentage of foreign B2B invoices that was overdue (32.9% of the value of foreign B2B receivables was overdue: overall survey average 26.3%).

At overall survey level, an average of 2.6% of domestic B2B invoices and 1.8% of foreign invoices resulted in payment default. Survey respondents in Poland reported the highest average payment default rates from B2B customers (4.4% of the value of domestic B2B receivables and 4.1 of the value of foreign B2B receivables).

Consistent with responses in the survey of half year ago, insufficient availability of funds was cited as the primary reason for payment delays from B2B customers (87.3% of respondents reported it as the primary reason for domestic payment delays, 71.0% for foreign payment delays; 2011: 80.4% domestic and 69.5% foreign). This is not expected to change for the foreseeable future.

Thomas Langen, Senior Regional Director from Atradius Central Eastern Europe stated, “Insolvencies and payment defaults continue to be a major issue for businesses in Europe, due to the deep economic difficulties in a number of countries in the region. With economic contraction forecast for the Eurozone in 2012, real GDP growth is expected to slow considerably in the Central and Eastern European region compared to 2011. The smaller economies closer to the Eurozone, such as Hungary, whose domestic market performance is already poor, are most at risk. Managing trade credit risk and protecting the business from payment defaults are therefore essential to success. Respondents of the Atradius Payment Practices Barometer, for the most part, appear to be aware of the risks they are being faced with and are taking some of the steps important to success in a more difficult business environment. As a credit insurer, Atradius regularly engages in many of the measures reviewed in the survey on behalf of our customers, to help them protect their balance sheets ensure their livelihood.”

The complete report highlighting the findings of the June edition of the Atradius Payment Practices Barometer focussing on Eastern Europe can be found in the Publications section of the Atradius.com website.

(Source - Atradius Press Release)