Overview of payment practices

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

Agri-food

Late payments and cash flow

  • Late payments in the agri-food industry in France affect 52% of the total value of B2B invoices (significantly up from last year’s 27%). 53% of respondents reported having to wait longer to cash in overdue invoices, up to 22 days on average. For 35%, there was no change in the average invoice-to-cash turnaround, while 12% cashed in overdue invoices earlier than before the pandemic.
  • Average DSO increases of up to 10% were reported by 45% of respondents (regional average: 57%). 38% reported increases of more than 10% (regional average: 35%). Currently DSO stands at an 82-day average (well below the 108-day average for the industry in Western Europe).
  • 45% told us they experienced cash flow difficulties due to the downturn. 38% reported no impact at all. This is consistent with the industry at regional level, where 37% reported a negative impact on cash flow and 27% told us their cash flow remained unaffected.
  • 60% delayed payments to suppliers (above the regional average of 45%). 35% spent more time and resources on chasing unpaid invoices (regional average: 37%).

Approach to credit quality assessments

  • After the onset of the economic crisis, businesses in the French agri-food changed the way they approached credit checks. Information provided by customers and financial statements are now the most common sources for creditworthiness assessments in the industry.
  • Priority is given to evaluating the customer’s ability to generate cash, alongside its financial flexibility and profitability. The majority of the industry reports that they will continue to monitor these areas over the coming months.

Approach to credit management

  • Following the onset of the economic crisis, survey respondents told us they more often resorted to self-insurance and outstanding invoice reminders, as well as offering discounts for early payment of invoices. Over the coming months, businesses in the sector will request payment guarantees and plan to speed up debt collection.
  • 56% of respondents expect customer creditworthiness to improve next year, while only 16% expect deterioration. This compares to 54% expecting improvement in Western Europe and 15% expecting deterioration.
  • 62% of the industry in France anticipates a fall in demand to present the greatest challenge to profitability in 2021. This compares to 42% with the same concern at regional level.

2021 industry outlook

  • 60% of respondents expect the domestic economy to improve over the next six months (regional average: 57%). 28% expect it to get worse (regional average: 27%). Similarly, the majority of businesses are optimistic about the outlook for the global economy (65% optimistic, 23% pessimistic) and international trade (50% optimistic, 30% pessimistic).

Construction materials

Late payments and cash flow

  • Late payments affect 43% of the total value of B2B invoices (compared to last year’s 28%). 43% of respondents reported having to wait longer to cash in overdue invoices, up to 25 days longer on average. For 46%, there was no change in the average invoice-to-cash turnaround, while 11% of respondents reported cashing in overdue invoices earlier than before the pandemic.
  • Average DSO increases of up to 10% were reported by 40% of the businesses polled. Increases of DSO above 10% were reported by 51% of businesses. Currently DSO stands at a 100-day average (above the 91-day average for the industry in Western Europe).
  • 43% of the respondents told us that they experienced liquidity issues due to the economic crisis (regional aver- age: 32%). 29% reported no impact on cash flow (notably lower than the 50% of respondents at regional level).
  • 51% of businesses delayed paying suppliers (regional average: 45%). 40% spent more time, costs and resources on chasing unpaid invoices (regional average: 33%).

Approach to credit quality assessments

  • Businesses in the French construction materials industry told us they more often sourced credit information directly from customers and plan to use this alongside customer financial statements, bank references and credit reports issued by specialist agencies.
  • The industry focuses on their customers’ ability to generate cash, profitability and financial flexibility. They plan to retain the same approach over the coming months.

Approach to credit management

  • Following the onset of the economic crisis, respondents told us they more often resorted to self-insurance and payment guarantees. Over the coming months, businesses plan to rely more on self-insurance and increase the use of outstanding invoice reminders.
  • 54% of respondents expect their customers’ creditworthiness to improve over the coming months (regional average: 39%). Just 14% expect to see a deterioration (regional average: 28%).
  • 49% of the construction materials industry in both France and Western Europe as a whole considers con- tainment of costs to present the greatest challenge to profitability in 2021. 46% believe the effective collection of outstanding invoices will pose the greatest challenge (regional average: 42%). For 43%, this will be maintaining adequate cash flow and restrictions to bank finance (regional average: 28%).

2021 industry outlook

  • 77% expects the domestic economy to improve over the next six months (regional average: 51%). Only 9% expects it to get worse. Optimism about the outlook for the global economy is expressed by 69% of respondents (compared to 40% at regional level). 54% anticipate a brighter outlook for international trade over the coming months (regional average: 47%).

Business services

Late payments and cash flow

  • Late payments in the French services/business services sector affect over half of the total value of B2B invoices (double compared to last year). 49% of respondents reported having to wait longer to cash in overdue invoices, up to 30 days on average. For 44%, there was no change and 7% reported cashing in overdue invoices earlier than before the crisis.
  • Average DSO increases of up to 10% were reported by 43% of the businesses. Increases of more than 10% were reported by 49% of businesses. Currently DSO in the sector stands at a 150-day average (above the 92-day average for the industry in Western Europe).
  • 43% of the businesses polled (regional average: 44%) told us they experienced cash flow issues caused by the economic crisis. 32% said that cash flow remained unaffected (28% in the region), while 25% reported a positive impact (28% in the sector at regional level).
  • 41% of the French services/business services sector delayed payments to suppliers (regional average: 38%). 39% spent more on time, costs and resources to chase unpaid invoices (in line with the regional average).

Approach to credit quality assessments

  • After the onset of the economic crisis, respondents told us they made wider use of information provided directly by the customer for credit assessments and now use these alongside financial statements and bank references.
  • Businesses prioritise evaluating the customer’s profitability and ability to generate cash. Survey respondents say they will retain this focus over the coming months alongside monitoring customer financial flexibility.

Approach to credit management

  • Following the onset of the economic crisis, the sector’s primary credit management practices include: payment guarantees (67% of respondents), self-insurance, outstanding invoice reminders and cash payment requests (55%). Over the coming months, businesses told us they plan to continue with this approach.
  • 52% of industry respondents (regional average: 48%) believe their B2B customers’ creditworthiness will improve over the coming months. In contrast, 21% believe it will deteriorate (regional average: 28%).
  • According to 44% of the businesses in France and Western Europe, maintaining adequate cash flow presents the greatest challenge to profitability in 2021. This is followed by the containment of costs (cited by 41%, compared to 31% in the region).

2021 industry outlook

  • The sector is optimistic about the outlook for the domestic economy over the coming months (52% expect it to improve, 32% to get worse). The same goes for the outlook for the global economy (40% optimistic, 37% pessimistic). Opinions about the outlook for international trade are almost evenly split (40% optimistic, 39% pessimistic).

Businesses in France are more worried than their peers in Western Europe overall about debt collection and protection of cash flow next year.

Atradius Payment Practices Barometer – November 2020

Machines

Late payments and cash flow

  • Late payments affect nearly 50% of the total value of B2B invoices in the French machines industry (a significant increase on last year’s 28%). 44% of survey respondents reported having to wait longer to cash in overdue invoices, up to 30 days longer on average. 39% reported no change in average invoice-to-cash turnaround, while 7% told us they converted overdue invoices into cash earlier than before the crisis.
  • Average DSO increases of up to 10% were reported by 44% of the industry. 48% reported increases of more than 10%. Currently DSO stands at a 119-day average (above the 110-day average for the industry in Western Europe).
  • 61% of businesses revealed they experienced liquidity shortages due to the economic crisis (regional average: 42%). Only 17% reported cash flow to be unaffected. This contrasts with the industry at regional level, where 27% reported the same.
  • To safeguard liquidity levels and contain costs due to the increase in late payments, businesses delayed paying suppliers and enacted hiring freezes (40% each, compared to 32% and 22% respectively).

Approach to credit quality assessments

  • Following the onset of the recession, the industry relied more on credit information provided directly from customers and combined this with checks on financial statements and bank references.
  • When assessing creditworthiness, priority is given to the evaluation of the customer’s profitability. This approach will remain unchanged over the coming months.

Approach to credit management

  • Following the onset of the economic crisis, survey respondents told us their credit management practices will include self-insurance, offering of discounts for early payment of invoices and outsourcing of debt collection to a specialist agency. Over the coming months, businesses told us they plan to continue with this approach, in addition to making wider use of trade credit insurance.
  • 30% of industry respondents believe their customers’ creditworthiness will improve next year and 40% believe it will deteriorate. At regional level 55% believe it will improve, and 19% believe it will deteriorate.
  • 48% of the industry believes containment of costs and effective debt collection both present the greatest challenges to profitability in 2021. An average of 48% in Western Europe share this view, and 32% of respondents in the region believe effective debt collection will be the greatest challenge.

2021 industry outlook

  • The industry is largely optimistic about domestic economy (52% expect it to improve, 30% to get worse). However 48% expect the global economy to decline and 35% anticipate improvement. 39% expect international trade to improve and 40% expect deterioration.

Machines

Late payments and cash flow

  • 45% of the total value of B2B invoices remained unpaid at the due date (higher than last year’s 32%). 53% of respondents reported having to wait longer to cash in overdue invoices, up to 30 days on average. For 47%, there was no change in the average invoice-to-cash turnaround. None of the businesses surveyed reported hav- ing cashed in overdue invoices more quickly than they did before the pandemic.
  • Average DSO increases of up to 10% were reported by 40% of the businesses polled. Increases of more than 10% were reported by 60%. Currently DSO stands at a 180-day average (above the 110-day average for the industry in Western Europe).
  • 47% of the survey respondents said they managed to contain the negative impact of the economic crisis on cash flow. 33% reported cash flow difficulties. This contrasts with the results for the region (39% reported negative impact, 34% no impact).
  • To safeguard liquidity levels 47% of respondents told us they delayed paying suppliers (regional average: 27%).

Approach to credit quality assessments

  • Following the onset of the downturn, the French steel/metals industry requested credit information directly from their B2B customers more often, adding this to their usual sources of trade references and credit reports.
  • The industry prioritises reviewing the customer’s financial flexibility and ability to weather unexpected shifts in the economic and business environment. Respondents say this approach will remain unchanged over the coming months.

Approach to credit management

  • After the onset of the pandemic the French steel/metals industry strengthened their credit management practices by increasing the frequency of outstanding invoice reminders, outsourcing of debt collection and seeking debt securitisation. Over the coming months the industry plans to increase reliance on self-insurance.
  • 40% of respondents from the French steel/metals industry expect customer creditworthiness to improve in the near future, while 19% to get worse.
  • 53% consider containment of costs to be the greatest challenge to profitability in 2021 (regional average: 45%). 47% believe effective collection of outstanding invoices presents the greatest challenge (regional average 40%).

2021 industry outlook

  • 53% of industry respondents expect the domestic economy to improve over the coming months (regional average: 63%). 13% expect it to get worse. 40% anticipate an improvement in the global economy, while 33% expect deteriorating. 47% expect international trade to get worse, whereas 40% are more optimistic.

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