Payment practices report
November 2020: domestic and export trade focus for business
Survey results for Switzerland
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 Switzerland.
Country Manager of Atradius Switzerland, commented on the report
When the COVID-19 pandemic took hold, businesses in Switzerland had already been operating within a heightened insolvency environment and using trade credit to attract foreign customers despite the pressures of the strong currency.
As the recession began to bite, businesses were already well-practised at protecting cash flow and managing credit, which is why the majority reported a continuation of their credit policies and payment terms.
There is still much we don’t know about the pandemic and how it might impact business next year. This is reflected in the largely pessimistic outlook expressed by the survey respondents. However, despite this downbeat tone, businesses expressed a strong desire to grow both domestic and international trade, supported by trade credit insurance.
Large enterprises within the domestic market most favoured with trade credit Businesses in Switzerland offered the greatest percentage of trade credit to larger enterprises on the domestic market with a strong credit record and payment history.
Credit policies target domestic customers and export sales Most businesses in Switzerland reported using trade credit in order to grow sales in both the domestic and export markets.
Despite cautious approach to terms, late payments grow by 70% Most businesses set payment terms of up to 30 days, a pol- icy that has not changed year-on-year. However this year saw an increase of 70% of the total value of invoices that were still outstanding after their due date.
Recession bites and businesses start to report distress 52% of businesses reported a drop in sales volume follow- ing the onset of the pandemic and 43% reported liquidity issues.
Credit insurance favoured by most businesses next year Looking ahead, the majority of businesses polled told us that they plan to use trade credit insurance in 2021 to help them protect their accounts receivables during the ongoing recession.
Credit policies remain fairly constant as business continues growth commitments
Over recent years, Switzerland has been operating within an environment of heightened insolvency where busi- nesses were using trade credit to both grow export sales and provide short-term finance to boost customer liqui- dity. Although the use of trade credit is down a little on last year’s figures, most businesses reported retaining last year’s credit policies after the onset of the pandemic.
In ad- dition to offering more trade credit than prior to 2019, this includes a commitment to trade credit insurance and the stated desire to growth both domestic and international trade accounts.
This year’s Payment Practices Barometer Survey took place after the onset of the pandemic. Comparing the re- sults to last year has given us a valuable insight into how businesses are dealing with the virus and with the subse- quent recession. Switzerland has experienced a big in- crease in late payments, with many businesses subsequently reporting a drop in sales volumes and liquid- ity issues.
Looking ahead the majority of businesses were fairly downbeat in their predictions for the global economy and international trade next year. That said a small majority believe the domestic economy is poised for growth.