Payment practices report

November 2020: Despite pandemic, businesses upbeat about 2021

Survey results for Hungary

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 Hungary.

Balázs Vanek,

Atradius Country Manager for Hungary commented on the report

This year’s Atradius Payment Practices Barometer survey took the temperature of businesses in Hungary at a critical moment as the pandemic took hold and businesess throughout the country had to implement lockdown regulations. More than half of the businesses polled (57%) told us that they would consider using trade credit insurance at some point during the next six months. Interestingly, the majority of businesses also reported that their greatest concern for 2021 was around the collection of outstanding invoices.

It could be that increasing numbers are turning to credit insurance to minimise the risk of non-payment and to benefit from professional collections services such as those provided by Atradius as an integral part of the credit insurance policy. Certainly the overall sentiment expressed by businesses was optimistic, with most telling us they anticipated an improvement in the economy next year.

Key takeaways

Trade credit withdrawn from higher-risk businesses

Poor payment behaviour was the most commonly cited reason behind a reduction in the amount of trade credit offered in B2B sales compared to pre-pandemic levels.

Overdue invoices increase, but stay in line with regional averages

During the pandemic, the total value of overdue B2B invoices increased by 23% on pre-pandemic levels to 46% of all B2B invoices in Hungary, close to the regional average of 45%.

Business confidence remains upbeat moving into 2021

Most businesses in Hungary believe the domestic and global economies will improve next year and that the greatest challenge to profitability will come from collecting outstanding invoices.

More than half of businesses in Hungary lengthen payment terms

In a bid to help customers and to encourage sales and stay competitive on the domestic market, 53% of businesses in Hungary reported lengthening their payment terms by 15 days or more.

Majority of Hungary businesses demand payment guarantees

Almost three quarters of businesses in Hungary told us they normally ask for payment guarantees. Self-insurance and trade credit insurance are the next most common credit management techniques practised by businesses in Hungary.

Business confidence remains upbeat moving into 2021

Most businesses in Hungary believe the domestic and global economies will improve next year and that the greatest challenge to profitability will come rom collecting outstanding invoices.

57% of respondents to the 2020 Payment Practices Barometer survey in Hungary reported a negative impact on revenue and 50% on cash flow. This compares favourably to Eastern Europe as a whole where 59% of businesses reported a negative impact on revenue and 51% on cash flow. Interestingly, the survey responses also show that Hungary has the lowest percentage of businesses in Eastern Europe reporting a negative impact on profitability (39%, compared to the regional average of 49%). This may be because the sales volume could have worked to offset costs.

When asked what kind of measures they needed to take to protect their business from the negative impact of the pandemic-led economic crisis, the most frequent response was that they needed to delay invoice payments to their own suppliers (35%). Businesses in Hungary also reporting workforce lay-offs and hire freezes, suggesting the pandemic may have had a high impact on the local labour market.

Hungary: top 5 challenges to business profitability in 2021

Hungary escapes more severe impacts of pandemic recession

The COVID-19 global pandemic hit Hungary at a time when the country’s economic growth was beginning to decelerate. However, robust growth in 2019 driven by high levels of private consumption and exports helped provide the country with an economic cushion. This may in part help explain why the pandemic-led economic crisis does not appear to have negatively impacted businesses in Hungary as severely as some other markets in the region. The annual survey provides valuable insight into the payments behaviour of businesses in Hungary. This year the survey was conducted during pandemic-led economic crisis and gives us a valuable insight into how the pandemic lockdowns have impacted businesses, especially when compared to last year’s results.

57% of respondents to the 2020 Payment Practices Barometer survey in Hungary reported a negative impact on revenue and 50% on cash flow. This compares favourably to Eastern Europe as a whole where 59% of businesses reported a negative impact on revenue and 51% on cash flow. Interestingly, the survey responses also show that Hungary has the lowest percentage of businesses in Eastern Europe reporting a negative impact on profitability (39%, compared to the regional average of 49%). This may be because the sales volume could have worked to offset costs. When asked what kind of measures they needed to take to protect their business from the negative impact of the pandemic-led economic crisis, the most frequent response was that they needed to delay invoice payments to their own suppliers (35%). Businesses in Hungary also reporting workforce lay-offs and hire freezes, suggesting the pandemic may have had a high impact on the local labour market.

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