Survey findings for Greece
Greece sees the highest percentage of credit refusals in Western Europe
41% of businesses in Greece reported an average 40% increase in the total value of B2B credit sales after the onset of the pandemic. However this is tempered by the fact that credit requests amounting to 30% of the total value of B2B sales were refused. In fact, the percentage of credit refusals was the highest across the whole of the Western Europe region. When businesses turned down credit requests they most often did so due to deterioration in the customer’s creditworthiness (47% of the respondents, higher than 26% in the region). Trade credit refusals were also most common within the SME segment. Trade credit is currently involved in 50% of the B2B sales, below the 55% average for Western Europe. For 43% of the respondents there was no change. A signiﬁcantly lower percentage of respondents in the country reported a decrease in B2B sales transacted on credit terms (16%).
Businesses reported that they most often accepted credit requests to encourage SME sales on the domestic market (38% of respondents, compared to 53% at regional level). 33% told us they offered credit to stay competitive on the domestic market (regional average: 28%). It’s worth noting, however, that 28% said they granted trade credit as a source of short-term ﬁnance. This compares to 19% in Western Europe overall, possibly indicating a higher incidence of ﬁnancial distress among businesses in Greece than in the region overall.
Payments terms in Greece closely mirror trade credit behaviour
As with their approach to offering trade credit, businesses in Greece told us that they offered longer payment terms to encourage domestic sales (as reported by 35% of respondents, regional average: 32%). This is followed by 27% who did so to stay competitive on the domestic market (regional average: 19%). 24% of respondents increased payment terms as a way of providing short-term ﬁnance (re-gional average: 23%).
64% of businesses reported setting payment terms of up to 30 days on average. 15% set terms from 31 to 60 days, 10% from 61 to 90 days and the remaining 11% from 90 days and above.
Overall, this results in average payment terms of 50 days. 52% of respondents reported granting longer payment terms after the onset of the pandemic, most often up to 30 days longer (higher than the 47% in Western Europe overall). 41% reported no change in their payment terms, while 7% requested shorter terms than before the pandemic, on average 10 days earlier than last year.
Over the coming months, 35% of businesses told us they plan to continue to apply the same trade credit policies as those they adopted during the pandemic.
of the businesses we polled told us the continuation of the economic crisis represents the greatest threat to proﬁtability next year. This is substantially more than the 30% of businesses reporting the same in Western Europe. 41% said that containment of costs is the greatest threat (regional average: 41%).
Atradius Payment Practices Barometer – November 2020
Overdue payments increase by 71%
After the onset of the pandemic, late payments in Greece increased to 48% of the total value of B2B sales (up from last year’s 28%). This represents an increase of 71% year-on-year and brings with it the ﬁnancing and administra-tive costs associated with carrying trade debts. Late payments can be signiﬁcantly expensive for the supplier.
On average, nearly half of the respondents reported they had to wait longer to cash in overdue invoices, (up to 26 days longer than last year). An average of 6% of the total value of B2B receivables was written off as uncollectable after the onset of the pandemic (7% average for Western Europe). 7% of the total value of receivables was still unpaid at 90 days overdue. This indicates that, on average, businesses in Greece have lost nearly 90% of the value of their B2B receivables that were not paid within 90 days.
The increase in late payments is also reﬂected in the lengthening of DSO. 48% of the businesses surveyed reported DSO increases of up to 10% (this is lower than 57%average for Western Europe). 43% reported increases of more than 10% (regional average: 37% ). Only 9% of businesses reported shorter DSO compared to before the pandemic (regional average: 7%).
More than half of businesses report cash ﬂow difﬁculties
According to 55% of businesses, the increase in customer payment defaults caused cash ﬂow difﬁculties (regional average: 38%) and led to them taking protective measures to contain operating costs and minimise liquidity shortages. These included delaying payments to suppliers (reported by 49% of respondents, higher than the 34% in Western Europe) and enacting hiring freezes (44%, notably higher than the 26% in the region overall).
In addition, respondents revealed a signiﬁcant drop in sales volume (as reported by 64%, far higher than the 45%at regional level). This is directly linked to the revenue loss experienced by 69% of respondents, compared to 51% in the region.
When asked if and to what extent the pandemic economic crisis impacted their company proﬁtability this year, far more businesses in Greece (62%) than in the region overall (37%) reported negative impact.
Business approach to credit assessments remains constant
We used this survey to ask businesses what type of credit information they used to assess customer creditworthiness. We compared this to last year’s data to assess behaviour both before and after the onset of the pandemic.
Most businesses told us that their approach to credit assessments prior to the pandemic did not change after the onset of the economic downturn. They normally relied on ﬁnancial statements (reported by 43% of businesses), as well as on bank references and information obtained directly from the customer (40% each). Interestingly Greece does not ﬁt into the pattern seen elsewhere in Europe where businesses sought information directly from their customers more frequently than before the pandemic. This is likely to be because the supplier-customer information exchange was already a common business practice before the pandemic hit.
When evaluating credit quality, most businesses told us they focused on their customers’ payment histories, proﬁtability and ﬁnancial ﬂexibility. Over the coming months, respondents told us they will continue monitoring these indicators, in particular the payment histories.
We asked businesses whether the pandemic caused them to change their approach to credit management. The majority did not change their strategy. Prior to the start of the pandemic, the majority of respondents favoured cash payments (as reported by 72%). Following the start of the pandemic, the use of cash has become more frequent (as reported by 34% of respondents). This trend is set to continue over the coming months, 62% of respondents saying this would be their preferred payment method next year. 57% told us they plan to use payment guarantees and 56% intend to offer discounts for early payment of invoices.
Businesses in Greece express optimism over improvement of customer creditworthiness
Although the progress of the pandemic will inevitably play a major role in determining the outlook for the recovery and future growth of the economy in Greece, more respondents are optimistic than pessimistic about the improvement of their customers’ creditworthiness in 2021. 56% of respondents predict an improvement in customer creditworthiness compared to the regional average of 47%, suggesting a greater sense of optimism among businesses in Greece than their peers in Western Europe. 25% predict deterioration and 19% of respondents foresee no change.
However, this optimism may be a reﬂection of the fact that 50% of respondents in the country expect the domestic economy to improve as opposed to the 40% expecting it to get worse or the 10% who believe it will remain the same. Less clear-cut is the opinion about the outlook for the recovery of the global economy, where 45% believe it will improve and 44% anticipate the opposite. In terms of international trade, the majority of respondents foresee a brighter future over the coming months (49% optimistic, and 38% pessimistic).
Continuation of economic crisis is greatest concern for businesses in Greece
44% of the businesses we polled told us the continuation of the economic crisis represents the greatest threat to proﬁtability next year. This is substantially more than the 30% of businesses reporting the same in Western Europe. 41% said that containment of costs is the greatest threat (regional average: 41%). 37% cite maintaining adequate cash ﬂow and the effective collection of outstanding invoices, this is largely echoed by the same percentage of businesses in the region.