British businesses threatened by cash flow problems Atradius’ latest Payment Practices Barometer reports
Leading trade credit insurer Atradius has just released its latest survey of the payment practices experienced by 3000 businesses across Western Europe. 33% of those questioned cited maintaining cash flow as the main threat to their profitability.
In addition, 47.9% cited insufficient funds as the main reason for payment delays in domestic B2B trade. As bank lending still remains at a moderate low and businesses continue to be impacted by fluctuating commodities prices, income stagnation and austerity measures, many are finding maintaining cash flow to be their biggest challenge.
Other highlights from the report include:
· British respondents are more likely to use trade credit for domestic than international trade – and with considerably greater frequency than last year, up 20.1% for domestic trade and 29.2% for international trade, year on year. The Western European average has dropped 8%, by way of comparison)
· Credit terms were offered primarily in order to secure long term trade relationships.
· The collection of overdue domestic B2B invoices has deteriorated in Britain with an increase of 4.9% (up to 30.1%) remaining unpaid at their due date.
· The total value of uncollectable receivables has increased significantly by 29.7% on domestic and 19% on international trade. In addition in 66.9% of British cases and 53.3% of foreign cases, this was due to their customer going out of business.
Marc Henstridge, Director of Risk for Atradius UK & Ireland explains: “The longevity of the downturn means that businesses can no longer count on any supply chain being 100% safe and the evidence of strained cash flow is unsurprising. Risks continue to emerge from the most unexpected corners where one business is impacted by the insolvency of another and we see the subsequent domino effect wiping out a number of businesses simultaneously. Putting adequate measures in place to manage these unknown risks remains key to the survival of Britain’s businesses.”
The full report can be downloaded free of charge from www.atradius.co.uk/latestreleases
Read more at www.atradius.co.uk/latestreleases