SYDNEY, June 16, 2021 / PRNewswire / – Companies Across Australia are suffering the effects of a full year of the Covid-19 pandemic, according to a report by credit insurance leader Atradius. The Large and Small Business Payment Practices Barometer survey looked at the payment behavior of B2B customers over the past year. The results are dramatic.
5% of all credit sales were written off as uncollectible, more than double the 2% average recorded before the pandemic. The same story applies to late payments, 54% of commercial invoices are late (compared to 21% in the pre-pandemic year). In addition to economic stressors, these significant increases are partly explained by a sharp increase in the number of credit sales. More than 4 in 10 companies surveyed (42%) said they were accepting credit applications much more frequently than before the pandemic.
On average, it took the construction industry a week longer than last year to settle overdue bills. Construction companies reported an overall DSO twice as long as last year (now an average of 49 days). 40% of industry respondents expect DSO levels to increase further this year. A significant percentage of companies across all industries have identified liquidity as one of their biggest concerns alongside the health of the global economy. Up to half of the agribusiness industry believes that the national economy will lead to improved sales and profits rather than export trade.
Unsurprisingly, 3 in 5 companies surveyed reported an increase in the administrative costs of debt management. However, many companies said the key to navigating the tough economic climate was agility. For example, up to 67% of those polled in the chemical industry believe that the companies that have been most successful in adapting to the challenges of the pandemic will more often accept trade credit applications from their customers in the future.
Marc Hoppe, Managing Director of Atradius Oceania, said: “As the customer credit risk environment becomes more difficult with more and more companies selling on credit, the insolvency environment is likely to increase. A write-off rate of 5% represents a loss of measures to protect against the risk of such losses.
“As businesses seek to grow in these uncertain economic times, it is important that they continue to employ strategic credit management measures such as credit insurance to minimize the risk of default. This will help protect businesses from the increased risk of customer bankruptcy, help them manage the additional volume of late payments more effectively, and will also facilitate business growth by helping businesses explore new opportunities, including expanding more credit to existing and new customers, and finding new markets to explore. “
Atradius is a global provider of credit insurance, surety and collection services, with a strategic presence in more than 50 countries. Atradius’ credit insurance, bonding and collection products protect businesses around the world against the risks of default associated with the sale of goods and services on credit. Atradius is a member of Grupo Catalana Occidente (GCO.MC), one of the largest insurers in the Spain and one of the world’s largest credit insurers. You can find more information online at https://group.atradius.com
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SOURCE Atradius SA