Overview of payment practices

By industry: impact of the COVID 19-induced economic crisis on industries

Chemicals

Late payments and cash flow

  • Late payments in the Austrian chemicals industry affect 34% of the total value of B2B invoices (up from last year’s 23%). 51% of respondents reported having to wait longer to cash in overdue invoices, up to 20 days on average. For 38% of respondents, there was no change in average invoice-to-cash turnaround, while 11% cashed in overdue invoices earlier than they did before the pandemic.
  • Average DSO increases of up to 49% were reported by 71% of respondents. 46% reported increases of above 10%. Currently DSO stands at a 94-day average. This compares to the 83-day average seen in Western Europe.
  • 53% of the industry told us their cash flow was negatively affected by the outbreak of the pandemic (regional average: 39%). 64% reported a negative impact on revenue (regional average: 53%).
  • Late payments caused 40% to increase the time, costs and resources spent on chasing overdue invoices (regional average: 39%). 29% either delayed payments to suppliers or pursued additional financing from external sources (regional averages: 32% and 27% respectively).

Approach to credit quality assessments

  • After the onset of the economic crisis, businesses did not change the way they approached credit checks. Information provided directly by customers, bank references and credit reports obtained from specialist rating agencies are currently the most common sources for creditworthiness assessments in the industry.
  • Industry respondents told us they prioritise evaluating their customers’ past payment history and financial flexibility. Over the coming months, this approach will remain the same.

Approach to credit management

  • Following the onset of the economic crisis, the industry sent overdue invoice payment reminders and offered discounts for early payment of invoices more frequently. A sizeable percentage began to self-insure against bad debt and to request payment guarantees. Over the coming months, payment reminders will be the credit management technique most of the sector plans to make wider use of
  • More respondents in the industry (46%, compared to 22% at regional level) expect customer creditworthiness to deteriorate over the coming months than those expecting improvement (22%, compared to 49% at regional level).
  • 47% of the industry believes the greatest challenge to profitability in 2021 to be maintaining adequate cash flow (regional average: 41%). This is followed by 35% that cited the threat of the continuation of the economic crisis affecting demand (regional average: 30%).

2021 industry outlook

  • 46% of the industry expects the domestic economy to improve, with the same percentage expecting it to get worse (regional average: 58% foresee improvement and 29% deterioration). 60% expressed pessimism about the global economy (regional average: 39%), with a minority of 26% anticipating improvement. 56% predicts a deterioration of international trade (regional average: 37%)

Construction materials

Late payments and cash flow

  • Late payments in the construction materials industry affect 32% of the total value of B2B invoices (compared to last year’s 16%). 11% of respondents reported having to wait longer to cash in overdue invoices, up to 20 days on average. However, for nearly 79%, there was no change in the average invoice-to-cash turnaround. 10% reported cashing in overdue invoices earlier than they did before the pandemic.
  • Average DSO increases of up to 10% were reported by 82% of construction materials businesses. Increases of DSO above 10% were reported by 14%. Currently DSO stands at a 130-day average (regional average: 91 days).
  • 57% of respondents told us the economic crisis had a negative impact on their revenue (regional average: 47%). 54% reported a negative impact on cash flow (regional average: 32%).
  • 50% of the industry suspended deliveries until payment of overdue invoices (regional average: 15%). 36% enacted hiring freezes (regional average: 22%).

Approach to credit quality assessments

  • After the onset of the pandemic, there was no change in the way the industry approached credit assessments. Customer financial statements, bank references and credit reports from specialist agencies are currently the credit information sources most often used by the industry.
  • Survey respondents prioritise evaluating their customers’ financial flexibility and ability to withstand unexpected shifts of the economic and business environment. They plan to continue with this approach next year.

Approach to credit management

  • The industry told us they strengthened their credit man- agement practices by adjusting credit terms and resorting to factoring more frequently than before the pandemic. However, a large majority said they also began to practise self-insurance and reduce reliance on a single customer. They plan to continue doing so over the coming months.
  • 50% of businesses in the industry expect customer creditworthiness to improve, and 14% to deteriorate, next year. For 36% there will be no change (32% at regional level share this opinion).
  • The industry considers collection of outstanding invoices, tensions in global trade and the continuation of the economic crisis to present the greatest challenges to profitability in 2021 (46% of respondents alike).

2021 industry outlook

  • 61% expects the domestic economy to improve over the next six months (regional average: 51%). 18% expects it to deteriorate (regional average: 25%). 54% expects the global economy to improve and 25% expects deterioration. 50% expects international trade to improve (regional average: 47%).

Consumer durables

Late payments and cash flow

  • Late payments affect nearly 40% of the total value of B2B invoices in the Austrian consumer durables industry (compared to last year’s 29%). 50% of respondents reported having to wait longer to cash in overdue invoices, up to 20 days on average. However, for nearly 37%, there was no change in the average invoice-to-cash turnaround. 13% reported cashing in overdue invoices earlier than they did before the pandemic.
  • Average DSO increases of up to 10% were reported by 50% of consumer durables businesses. Increases of more than 10% were reported by 40%. Currently DSO stands at an 83-day average (higher than the regional average of 61 days).
  • 70% of respondents told us their revenue was negatively affected by the pandemic (regional average: 49%). A similar pattern was seen with cash flow with 53% reporting ill effects (regional average: 42%).
  • 64% of the industry most often needed to increase the time, costs and resources they spent on chasing unpaid invoices (significantly higher than the 40% in Western Europe overall).

Approach to credit quality assessments

  • Following the onset of the economic crisis, there was no change in the way the industry approached the assessments of their B2B customers’ credit standing. Customer financial statements, bank references and credit reports from specialist agencies are currently the credit information sources used most often used.
  • The industry prioritises evaluating the customer’s past payment history and financial flexibility. Survey respondents told us this approach will remain substantially unchanged over the coming months, but there will be a stronger focus on the customers’ profitability as well.

Approach to credit management

  • Following the onset of the economic crisis, the Austrian consumer durables industry told us they offered discounts for early payment of invoices and practised self-insurance more frequently than before the pandemic. Over the coming months, they plan to continue with this approach in addition to requesting payment in cash more often.
  • 40% of industry respondents (regional average: 50%) believe their B2B customers’ creditworthiness will improve over the coming months. 23% believe it will deteriorate (in line with the regional average for the industry).
  • 43% of respondents believe that effective collection of outstanding invoices presents the greatest challenge to profitability in 2021 (regional average: 44%). The continuation of the economic crisis, fall in demand and supply chain disruptions are also considered to threaten business prof- itability next year (37% of respondents).

2021 industry outlook

  • 73% expects the domestic economy to improve over the next six months (regional average: 57%). 17% expects it to deteriorate (regional average: 25%). 63% anticipates improvement in the global economy and 30% expects deterioration. 60% expects international trade to get better (regional average: 56%).

70%

of respondents told us their revenue was negatively affected by the pandemic (regional average: 49%).

Atradius Payment Practices Barometer – November 2020

Transport

Late payments and cash flow

  • Late payments in the transport industry in Austria impact 43% of the total value of B2B invoices (compared to last year’s 27%). The pandemic recession led to 42% of respondents telling us they had to wait longer to cash in overdue invoices, up to 15 days on average. For 51% of respondents, there was no change in average invoice-to-cash turnaround. 7% said that they cashed in overdue invoices earlier than before the pandemic.
  • 58% of businesses reported DSO increases of up to 10%, while 36% reported increases of more than 10% compared to before the pandemic. Currently DSO stands at a 120-day average (compared to the 134-day industry average in Western Europe).
  • 56% of respondents told us the pandemic-induced economic crisis had a negative impact on their revenue (in line with the regional average). However, more respondents in Austria (40%) than in Western Europe (25%) said that they managed to contain the negative impact of the pandemic’s economic crisis on cash flow.
  • To contain liquidity shortages, 31% of businesses told us they increased the time, costs and resources spent on chasing unpaid invoices (regional average: 34%). 30% delayed payments to suppliers and 30% reduced the workforce (regional average: 30% and 23% respectively).

Approach to credit quality assessments

  • In response to the pandemic recession, the industry told us they paid closer attention to evaluating credit specialist agency reports. This, alongside bank references and customers’ financial statements are now the most commonly used sources of credit information.
  • Priority is given to evaluating the customer’s past payment history, financial flexibility and profitability. This approach will remain unchanged over the coming months, but will be complemented by assessments of the customer’s ability to generate cash.

Approach to credit management

  • Following the onset of the economic crisis, survey respondents told us they strengthened their credit management practices by adjusting payment terms and offering discounts for early payment more often than in the past. Over the coming months, businesses told us they will continue to follow this approach, but they plan to reduce reliance on single buyers as well.
  • More respondents from the Austrian transport industry (38%, regional average 40%) expect their B2B customers’ creditworthiness to deteriorate than those expecting improvement (38%, regional average 29%) over the coming months.
  • 42% of respondents believe that containment of costs presents the greatest challenge to profitability next year (regional average: 41%). The continuation of the economic crisis ranks second (38% of respondents, compared to a 31% regional average).

2021 industry outlook

  • 51% of respondents expect the domestic economy to improve over the coming months (regional average: 52%). 40% expects it to get worse. Opinion on the outlook for the global economy is not really distinct (47% optimistic, 42% pessimistic). A gloomier outlook for international trade is expected (33% optimistic, 56% pessimistic).

Paper

Late payments and cash flow

  • Late payments in the Austrian paper industry impact 22% of the total value of B2B invoices (compared to last year’s 19%). 31% of respondents told us they had to wait longer to cash in overdue invoices, up to 18 days on average. For 66% of respondents, however, there was no change in average invoice-to-cash turnaround, while the remainder said that they cashed in overdue invoices earlier than before the pandemic.
  • 74% of businesses reported DSO increases of up to 10%, while 26% reported increases of more than 10% compared to before the pandemic. Currently DSO stands at a 140-day average.
  • 43% of industry respondents told us the economic crisis had a negative impact on their revenue, while the remainder said their revenue was unaffected. 48% managed to contain the negative impact of the pandemic’s economic crisis on cash flow, and the same percentage of respondents reported no impact at all.
  • To contain liquidity shortages, 43% of businesses told us they increased the amount of time, costs and resources spent on chasing unpaid invoices. 31% pursued additional financing from external sources.

Approach to credit quality assessments

  • In response to the pandemic recession, businesses told us they did not change their approach to customer credit assessments. This includes bank references, credit reports by specialist agencies and credit information obtained directly from the customer. This approach will remain the same over the coming months.
  • The industry gives priority to evaluating the customer’s past payment history, financial flexibility and profitability. This approach will remain unchanged over the coming months, but will be complemented by assessments of the customer’s ability to generate cash.

Approach to credit management

  • Following the onset of the economic crisis, survey respon- dents told us they strengthened their credit management practices by offering discounts for early payment of invoices and requesting payment in cash more often than in the past. Over the coming months, businesses in the industry told us they plan to continue with this approach.
  • In the Austrian paper industry, more respondents expect their B2B customers’ creditworthiness to deteriorate (33%) than those expecting improvement (28%) over the coming months.
  • 48% of respondents believe that maintaining adequate cash flow is the greatest challenge to profitability next year. The continuation of the economic crisis ranks second (45% of respondents).

2021 industry outlook

  • 52% of respondents expect the domestic economy to improve over the coming months. 31% expects it to get worse. Opinion on the outlook for the global economy is pessimistic (31% optimistic, 45% pessimistic), with similar opinions expressed over international trade (33% optimistic, 38% pessimistic).

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