Payment practices report
November 2020: Rise in overdue payments due to pandemic clouds 2021 outlook
Survey results for Bulgaria
The Atradius Payment Practices Barometer is an annual survey that assesses business payment behaviour throughout the world. The survey explores a range of topics including payment terms, payment delays, credit sales and DSO (Days Sales Outstanding).
The survey provides us with the opportunity to hear directly from businesses and, this year, gives us insight into how businesses are coping with the COVID-19 pandemic and global recession.
In this report, you will find the survey results for Bulgaria.
Atradius Country Manager for Bulgaria commented on the report
This year Bulgaria saw an increase in the total amount of B2B sales transacted on credit. Encouragingly there was also an increase in the use of credit management tools, such as trade credit insurance. In the current economic environment, strong credit management practices are vital.
Bulgaria’s commitment to credit management may be why the country is well below the regional average for the total value of overdue B2B invoices.
That said, this figure is still well up on last year when benchmarked against the country’s own performance.
The environment is tough for businesses in Bulgaria right now. Much will hinge on how the pandemic progresses through 2021 and how well businesses continue to protect themselves against the threat of insolvency.
Pandemic recession hits Bulgaria revenue and sales harder than rest of region Bulgaria leads Eastern Europe in the proportion of businesses reporting a negative impact on revenue and sales, as a result of the pandemic-led economic crisis.
Bulgaria sees big increase in use of trade credit and overdue invoices B2B sales transacted on credit in Bulgaria increased by 27% compared with last year and longer payment terms were reported by 50% of businesses. Perhaps inevitably, the country also saw an increase in total value of overdue B2B invoices (38%, up from 23% last year).
Cash payments still favoured by majority Most of the businesses we polled in Bulgaria (67%) told us they most often request cash payments in a bid to protect their business from the risk of non-payment of invoices.
Hiring freezes enacted by more businesses in Bulgaria than rest of region More businesses in Bulgaria told us they had introduced hiring freezes in a bid to cut costs (48%), than anywhere else in Eastern Europe (regional average: 33%).
Bulgaria leads region for amount of businesses worried about 2021 economy 47% of businesses in Bulgaria reported concern about the pandemic-induced economic crisis. This is the highest of the countries polled in the region and well above the regional average of 39%.
Bulgaria: top 5 challenges to business profitability in 2021
COVID-19 casts shade over Bulgaria’s economy
The economic growth that Bulgaria had been enjoying last year stalled with the onset of the COVID-19 induced recession. Ongoing economic challenges are causing stress for Bulgaria-based businesses, many of which have expressed a pessimistic outlook for next year. The results of this year’s Payment Practices Barometer survey paint an interesting picture, with businesses taking proactive steps to promote trade while working to protect themselves from the threat of non-payment of invoices. For example more businesses in the country offered B2B credit after the pandemic than before. Survey respondents told us that this was chiefly to stimulate sales. In addition to the growth in B2B credit, is a corresponding increase in the use of credit management techniques and tools. These are clearly working to a degree as businesses in Bulgaria reported a much lower percentage of overdue invoices than the regional average.
However, a significant proportion of businesses in Bulgaria have been negatively impacted by the pandemic-induced economic crisis. More respondents expressed pessimism over the outlook for both the domestic and global economies, as well as domestic and international trade, than the regional average. The next six months will be crucial for Bulgaria’s economy. Strong credit management practices will be needed alongside strong political leadership as the country continues to navigate the economic impacts of the health crisis. Throughout this report, we compare this year’s survey results to those we gathered last year. In addition to helping us identify trends, last year’s survey figures provide an important benchmark for us to compare pre and post pandemic payments behaviour.