Main survey results for Poland

More trade credit on offer than before pandemic as businesses compete for sales

Trade credit is currently involved in 55% of the B2B sales of businesses surveyed in Poland, up from last year’s 49%. In addition, 40% of the suppliers polled in the country reported an increase in the total value of B2B sales transacted on credit during the pandemic, compared to before the pandemic. This was the greatest increase in Eastern Europe, matched only by Hungary. 38% reported was no change and 22% reported a decrease in B2B sales on credit.

According to businesses in Poland, this clear favouring of trade credit is driven by a desire to increase sales, in particular on the domestic market.

54% of the businesses polled for the Payment Practices Barometer Survey in Poland told us that they most often accepted requests for trade credit from SME customers, and that they did so to encourage sales on the domestic market. Among the businesses who reported increased B2B sales on credit, the average increase was about 20%.

In the cases where requests for trade credit were refused (largely in the SME segment) the primary reason for refusal was the deterioration of the customer’s creditworthiness (53% of respondents, well above the 28% average for the region). On average, trade credit refusals amounted to nearly 30% of the total B2B sales value.

Businesses in Poland are more concerned about containment of costs and maintain adequate cash flow in 2021 than their peers across Eastern Europe.

Atradius Payment Practices Barometer – June 2020

Most businesses keep a lid on payment terms, with a 30 day max limit

A vast majority (73%) of the businesses surveyed in Poland reported setting payment terms of 30 days or less. 21% of businesses told us their payment terms were 31 to 60 days and the remaining 6% from 90 days or above. This means that the average payment terms for the country during the pandemic were 38-days, unchanged from pre-pandemic levels.

Despite keeping most payment terms in the region of 30 days, many businesses told us that they supported suppliers during the downturn by granting extra time to settle invoices. Compared to before the pandemic, 53% of the businesses surveyed granted payment terms up to 15 days longer.

Only 4% of respondents reported asking their B2B customers to pay invoices earlier than last year. The main reasons businesses gave for granting longer terms included trying to encourage domestic sales and staying competitive on the domestic market (as reported by 27% of businesses).

Over the next six months, businesses in Poland plan to continue applying the same trade credit policies they adopted during the pandemic. This suggests that many businesses believe the economic situation will not change in the short term at least.

Late payments increase during pandemic

During the pandemic 44% of the total value of B2B invoices issued in Poland were overdue. Although this is a big step up from the 25% average seen last year, 44% is largely in line with the regional average. It corresponds to an average 76% increase year-on-year. In contrast to the growth in the total value of overdue invoices, the amount of write-offs in Poland halved to 6% of the total value of B2B invoices, down from 10% last year. This could be because some long overdue invoices are still in progress and have not yet been written off. It could also be due to businesses working harder to collect invoices during the pandemic recession.

The increase in late payments caused by the pandemicled economic crisis is reflected in the lengthening of DSO. 61% of businesses reported DSO increases up to a maximum of 10%. However, in contrast, just 26% reported increases of more than 10% compared to before the pandemic. This, along with the reduction in writeoffs, could demonstrate a strong performance in invoice-to-cash turnarounds of long-term outstanding invoices of high value.

Businesses work more closely with customers to assess credit­worthiness

We asked businesses in Poland about the sources of information they used to assess the creditworthiness of customers and prospects both before and after the onset of the pandemic recession. Prior to COVID-19, most of the businesses we polled said they relied on financial statements (47%) and bank references (41%). After the virus took hold and shutdowns began to squeeze, businesses started to complement these sources with data provided directly from the customers (50% of respondents).

Once credit information is obtained, businesses in Poland told us they prioritise assessing the debt capacity of their customer, as well as its capability to generate cash. They also told us they plan to consolidate this approach over the next six months. This largely tallies with the opinion many businesses expressed that the creditworthiness of their customers will deteriorate in 2021, as reported by 30% of respondents, higher than the regional average of 22%. For 44% of the survey’s respondents, however, creditworthiness will improve.

Outstanding invoice reminders most commonly used in Poland

In a bid to minimise the risk of customer payment default, most businesses use outstanding invoice payment reminders (dunning letters). This was reported by 71% of businesses in our Polish survey, the highest percentage in the region and equal only to Turkey. The second most commonly used credit management technique practised by businesses in Poland is factoring (65% of survey respondents).

As the pandemic took hold, businesses turned to trade credit insurance more often (49% of respondents), although many businesses (29%) still preferred to resort to self-insurance. While most of the businesses we spoke to in Poland confirmed that they will keep on using the same credit management tools over the next six months, the majority (74%) reported that they will resort to self-insurance over the same time frame.

More businesses withhold payment to suppliers

We asked businesses what measures they took to protect themselves from the negative impact of the pandemicled economic crisis. The most frequent response was to delay payment to suppliers (43%, in line with the regional average), followed by an increase in the amount of time, costs and resources spent on chasing overdue invoices (35%) and a hiring freeze (32%).

Business confidence upbeat thanks to a firm grip on profitability

When looking forward to 2021, most of the businesses polled in Poland reported that both containment of costs and maintaining adequate cash flow are the greatest challenges to business profitability next year. This was reported by an average of 43% of respondents, compared to 37% at regional level, suggesting businesses in Poland are more concerned about this than their peers across Eastern Europe. Interestingly, Poland had the fewest number of businesses in the region (32%) that expressed concern about the length of pandemic-induced economic crisis and the challenges this could pose to profitability in 2021.

This could be because they seem to have a firm grip on profitability. Poland has the second lowest percentage of respondents in Eastern Europe (after Hungary) reporting a negative impact of the pandemic-led economic crisis on their profitability.

Looking forward, more of the respondents to our survey believe the domestic economy will improve over the next six months (55%) than deteriorate (34%). Businesses in Poland were more pessimistic about the outlook for the global economy, with 38% expecting an improvement and 44% anticipating deterioration. Opinions on the outlook for international trade in 2021 were fairly evenly spilt (44% improve, 42% deteriorate).

Eastern Europe: top 4 measures to manage liquidity issues due to the impact of the pandemic

Sample: all interviewed companies Source: atradius payment practices Barometer – november 2020

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