Payment practices report

November 2020: business confidence high despite pandemic

Survey results for Denmark

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 Denmark.

Erik Skovgaard Nielsen,

Country Manager for Denmark, commented on the report

Denmark's economy appaers to be weathering the COVID-19 storm relatively well and seems to have been hit less hard than almost any other country in Europe. It helps that the country’s food and pharmaceutical export products have continued to be in high demand. However, other factors may also form part of the equation.

For example, businesses have little appetite for long payment terms (thus reducing risk levels) and there is a strong tradition in favour of credit insurance. In fact, after the onset of the pandemic, take up of credit insurance increased even further among businesses in every sector, including a high proportion who used it for the first time. This has enabled trade to keep flowing and provided a strong framework of business confidence.

Large unprecedented government measures has taken place to support companies during the pandemic and high uncertainty exists as to impact on payments and business insolvencies when these measures expires. Adding to the uncertainty is the overall high dependency on export and international trade as more than half of the Danish GDP is export driven.

Key takeaways

The majority of businesses in Denmark use credit insurance Trade credit is currently involved in 63% of the B2B sales of the businesses surveyed in Denmark. This is higher than the 55% average reported for Western Europe.

Businesses reluctant to lengthen payment terms Although 45% of respondents reported granting longer payment terms following the onset of the pandemic, the vast majority of businesses do not offer terms longer than 60 days.

Late payments increase following onset of pandemic The total value of overdue invoices in Denmark increased to 44%. This is significantly higher than last year’s average of 25%, and represents a 76% increase year-on-year.

Negative effect of pandemic less severe than regional peers Fewer businesses in Denmark reported difficulties with profitability, cash flow, revenue and sales than the average for Western Europe.

Substantial number of businesses turns to credit insurance Following the pandemic downturn 42% businesses used credit insurance for the first time and 49% plans to employ trade credit insurance next year.

Businesses fare well despite challenges of the pandemic

The results of the Payment Practices Barometer survey in Denmark paint a largely positive picture. Benchmarking this year’s results from the survey, which took place during the pandemic, against last year’s pre-pandemic figures, it is clear to see that the lockdown restrictions and global recession have impacted business. However the impact is relatively light, especially when compared to Denmark’s neighbours in Western Europe. For example, 75% of the country’s sales were made on credit last year. This year, although that figure has dropped to 63%, it is still substantially higher than the Western European average of 55%.

Signs of stress are evident. There is an increase in late payments. Many businesses report a loss of revenue and pressure on cash flow. However, when compared to the region, the negative indicators are far less severe. This fairly upbeat assessment can also be seen in the positive outlook that the majority of businesses have for 2021. Significantly more businesses expect the domestic economy to improve than decline next year. This echoes research published by the EU Commission that shows that a fall in private consumption was fairly moderate across the country and hat despite extensive lockdown measures the economy is proving to be resilient.

Denmark: top 5 challenges to business profitability in 2021

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