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 Polish agri-food industry affect nearly 43% of the total value of B2B invoices in the industry (significantly up from last year’s 22%). Due to the pandemic-induced economic crisis, 40% of respondents reported having to wait longer to cash in overdue invoices, up to 20 days on average.
  • Average DSO increases of 10% or more were reported by 91% of respondents. Currently DSO in the industry stands at a 154-day average (well above the 103-day average for the industry in Eastern Europe).
  • 62% of the survey respondents in the industry told us the pandemic-induced economic crisis has negatively impacted their revenue, while 55% of respondents reported negative impact on cash flow.
  • To protect the business from liquidity shortages due to late payments, 47% of respondents from the Polish agrifood industry needed to delay payments to their own suppliers, and 37% needed to increase the time and resources spent on chasing unpaid invoices.

43%

of Polish businesses delayed payments to their own suppliers to avoid liquidity shortages arising from increased customer payment default due to the pandemic.

Atradius Payment Practices Barometer – June 2020

Approach to credit quality assessments

  • After the onset of the pandemic-led economic crisis, respondents from the Polish agri-food industry changed the way they approached credit checks and began to obtain credit information directly from their customers more often. This data along with bank references are now the most commonly used sources for creditworthiness assessments.
  • Once credit information is collected, priority is given to evaluating the customer’s debt capacity, financial flexibility and capability of generating cash. The survey respondents from the industry said that over the next six months they would place a stronger focus on these areas, in addition to monitoring their customers’ profitability.

Approach to credit management

  • Following the onset of the pandemic-led economic crisis, survey respondents in the Polish agri-food industry worked to minimise the risk of payment default by sending outstanding invoice reminders more often and employing several credit management tools. These included: self-insurance, trade credit insurance and factoring. Over the next six months, respondents in the industry plan to make wider use of self-insurance and outstanding invoice reminders.
  • More respondents expect their B2B customers’ creditworthiness to improve (41%) than those expecting deterioration (31%) over the next six months.
  • Maintaining adequate cash flow (expressed by 56% of respondents, significantly higher than the 45% of respondents in the industry at regional level), and containment of costs (53%, significantly higher than the 42% of respondents in the industry at regional level) are considered the greatest challenges to profitability in 2021.

2021 industry outlook

  • Slightly more respondents (48%) expect the domestic economy to improve over the next six months than those expecting it to get worse (46%). The majority of businesses expressed pessimism about the outlook for the global economy (33% optimistic, 54% pessimistic) and international trade (40% optimistic, 51% pessimistic).

Chemicals

Approach to credit quality assessments

  • After the onset of the pandemic recession, respondents from the Polish electronics industry changed the way they approached credit checks and began to engage directly with their customers more often. Data, including bank references and financial statements along with additional information, provided directly from the customer are now the most commonly used sources for creditworthiness assessments.
  • Once credit information is collected, priority is given to the evaluation of both the customer’s debt capacity and profitability. This approach will remain unchanged over the next six months.

Late payments and cash flow

  • Late payments in the Polish chemicals industry affect nearly 42% of the total value of B2B invoices (double compared to last year’s 21%). Due to the pandemicinduced economic crisis, 45% of respondents reported having to wait longer to cash in overdue invoices, up to 17 days on average.
  • Average DSO increases of 10% or more were reported by 92% of respondents. Currently DSO in the Polish chemicals industry stands at a 69-day average (well below the 91-day average for the industry in Eastern Europe).
  • 42% of the survey respondents in the industry (well below the 58% of respondents in the industry at regional level) told us the pandemic-induced economic crisis had a negative impact on their revenue, while 32% of respondents reported negative impact on cash flow (well below the 47% of respondents in the industry at a regional level).
  • To protect the business from liquidity issues due to late payments, respondents from the Polish chemicals industry most often needed to delay payments to their own suppliers (43% of respondents).

Approach to credit quality assessments

  • After the onset of the pandemic recession, respondents from the Polish chemicals industry changed the way they approached credit checks and began to make wider use of credit bureau reports, adding to the information available in the customer’s financial statements and in its past payment records.
  • Once credit information is collected, priority is given to the evaluation of the customer’s debt capacity and capability of generating cash. Survey respondents say this approach will remain unchanged over the next six months, signalling the sector’s strong focus on customer liquidity levels.

Approach to credit management

  • Following the onset of the COVID-19 economic crisis, survey respondents in the Polish chemicals industry increased their efforts to reduce the impact of potential payment defaults on the business. The steps they took included: attempting to collect on outstanding invoices more quickly than before the pandemic and offering discounts for early payment of invoices more often. Over the next six months, businesses polled in the industry plan to make wider use of self-insurance, factoring and trade credit insurance.
  • More respondents expect their B2B customers’ creditworthiness to improve (50%) than those expecting deterioration (33%) over the next six months.
  • For most of the respondents in the Polish chemicals industry, a continuation of the economic crisis triggered by the pandemic is the greatest challenge to profitability in 2021 (47% of respondents, compared to 40% in Eastern Europe). Containment of costs and disruption to the supply chain (both at 42%) follow as the next greatest challenges.

2021 industry outlook

  • Significantly more respondents (60%) expect the domestic economy to improve over the next six months than those expecting it to get worse (23%). The majority of businesses were also downbeat about the outlook for the global economy (38% optimistic, 41% pessimistic) while a brighter outlook for international trade is expected (52% optimistic, 33% pessimistic).

Construction

Late payments and cash flow

  • Late payments in the Polish construction industry affect nearly 36% of the total value of B2B invoices in the industry (double compared to last year’s 27%). Due to the pandemic-triggered economic crisis, 56% of respondents reported having to wait longer to turn overdue invoices into cash, up to 15 days on average.
  • Average DSO increases of 10% or more were reported by 87% of respondents. Currently DSO in the Polish construction industry stands at a 129-day average (above the 112-day average for the industry in Eastern Europe).
  • 65% of the survey respondents in the industry (above the 59% of respondents in the industry at regional level) told us the pandemic-induced economic crisis had a negative impact on their sales volume. 43% of respondents reported negative impact on cash flow (above the 39% of respondents in the industry at regional level).
  • To protect the business from liquidity issues due to late payments from customers, respondents from the Polish construction industry most often needed to delay payments to their own suppliers (42% of respondents) and freeze hiring (31%).

Approach to credit quality assessments

  • After the onset of the pandemic-led economic crisis, respondents from the Polish construction industry changed the way they approached assessments of their customers’ credit quality. They began to make wider use of information provided directly by the customer about its credit standing, adding to the insights available in its past payment records, financial statements and bank references.
  • Once credit information is collected, respondents in the industry assess customers’ credit quality starting from the evaluation of their payments history, capability of generating cash and profitability. This approach will remain unchanged over the next six months.

Approach to credit management

  • Following the onset of the economic crisis, survey respondents in the Polish construction industry increased their efforts to minimise the impact of potential payment defaults on the business. In addition to intensifying activities aimed at collecting outstanding invoices through outstanding invoice payment reminders, respondents in the industry reported to have made a wider use of trade credit insurance. Over the next six months they will continue using the same credit management tools, but they will also place stronger emphasis on techniques aimed at avoiding the concentration of the default risk in their B2B credit-based sales ledger.
  • Respondents in the industry do not have a clear-cut opinion about their B2B customers’ creditworthiness outlook over the next six months. Those expecting deterioration are equally split with those expecting improvement (at 31% each). The remaining ones foresee no change.
  • For most of the respondents in the Polish construction industry (43%, above the 32% of respondents in the industry at regional level). The continuation of the economic crisis triggered by the pandemic, as well as maintaining adequate cash flow (both at 38%) follow suit.

2021 industry outlook

  • Significantly more respondents (51%) expect the domestic economy to improve over the next six months than those expecting it to get worse (31%). The majority of businesses were more uncertain about the outlook for the global economy (43% optimistic, 40% pessimistic) while a darker outlook for international trade is expected (40% optimistic, 47% pessimistic).

Electronics

Late payments and cash flow

  • Late payments in the Polish electronics industry affect nearly 50% of the total value of B2B invoices (more than double compared to last year’s 27%). Due to the pandemic-triggered economic crisis, 33% of respondents reported having to wait longer to turn overdue invoices into cash, up to 32 days on average.
  • Average DSO increases of 10% or more were reported by 85% of respondents. Currently DSO in the industry stands at a 121-day average (largely in line with 108-day industry average in Eastern Europe).
  • Most of the survey respondents from the Polish electronics industry (74% in each case) told us the pandemic-induced economic crisis has negatively impacted their cash flow (compared to 46% at a regional level). 72% of respondents reported a negative impact on revenue (compared to 46% at a regional level).
  • Due to late payments from their B2B customers, most of the respondents in the electronics industry (51%) needed to delay payments to their own suppliers to avoid liquidity issues.

Approach to credit management

  • Following the onset of the COVID-19 pandemic-led economic crisis, survey respondents in the Polish electronics industry worked harder to minimise the impact of potential payment defaults on the business. They most often resorted to factoring, trade credit insurance and offering discounts for early payment of invoices. Over the next six months, businesses told us they would send out more outstanding invoice reminders and practise more timely collections activities.
  • More respondents expect their B2B customers’ creditworthiness to improve (42%) than those expecting deterioration (25%) over the next six months.
  • The greatest challenges to profitability in 2021 expected by businesses polled in the Polish electronics industry include: a fall in demand (55% of respondents, compared to 44% at a regional level) and supply chain disruption (50% compared to 25% at a regional level).

2021 industry outlook

  • Significantly more respondents (63%) expect the domestic economy to improve over the next six months than those expecting it to get worse (25%). The same goes for expectations on the future of the global economy (46% optimistic, 32% pessimistic) and international trade (45% optimistic, 37% pessimistic).

Machines

Late payments and cash flow

  • Late payments in the Polish machines industry affect 61% of the total value of B2B invoices (significantly up from last year’s 34%). As a consequence of the pandemic-triggered economic crisis, 80% of respondents reported having to wait significantly longer to turn overdue invoices into cash, up to 27 days on average.
  • Average DSO increases of 10% or more were reported by 61% of respondents. Currently DSO in the industry stands at a 50-day average (in line with the industry average in Eastern Europe).
  • 60% of the survey respondents in the Polish machines industry reported that the pandemic-induced economic crisis has impacted their revenue. 51% reported a negative impact on cash flow and profitability. Each of these match regional averages.
  • Due to late payments from their B2B customers, respondents from the Polish machines industry most often took the measure of slowing down payment of invoices to their own suppliers (50% of respondents).

Approach to credit quality assessments

  • After the onset of the pandemic recession, respondents from the Polish machines industry changed the way they approached credit checks and began to engage directly with their customers more often to obtain financial statements and up-to date-information.
  • Once credit information is collected, priority is given to the evaluation of customer profitability and capability of generating cash when assessing creditworthiness. This approach will remain unchanged over the next six months.

Approach to credit management

  • Following the onset of the COVID-19 pandemic-led economic crisis, survey respondents in the Polish machines industry worked harder to minimise the impact of potential payment defaults on the business. They increased the use of outstanding invoice reminders and debt securitisation. They also expressed greater interest in trade credit insurance, of which they plan to make wider use over the next six months.
  • More respondents expect their B2B customers’ creditworthiness to improve (72%) than those expecting deterioration (20%) over the next six months.
  • The greatest potential challenges to profitability in 2021 cited by respondents include: supply chain disruptions (expressed by 48% of respondents) and collection of outstanding invoices (44%).

2021 industry outlook

  • Significantly more respondents (69%) expect the domestic economy to improve over the next six months than those expecting it to worsen (23%). The same goes for their views on the future of the global economy (41% optimistic, 27% pessimistic) and their outlook on international trade (43% optimistic, 24% pessimistic).

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