Overview of payment practices

By industry: impact of the COVID 19-induced economic crisis on industries

Agri-foods

Late payments and cash flow

  • Late payments in the Belgian agri-food industry affect 45% of the total value of B2B invoices (significantly up from last year’s 23%). 40% of respondents reported having to wait longer to cash in overdue invoices, up to 21 days on average. For 47%, there was no change in the average invoice-to-cash turnaround, while 13% of respondents cashed in overdue invoices earlier than before the pandemic.
  • Average DSO increases of up to 10% were reported by 49% of respondents. 40% reported increases of above 10%. Currently DSO stands at an 82-day average. This is well below the 108-day average for the industry in Western Europe.
  • 61% told us their revenue was negatively affected by the pandemic downturn. 23% reported a positive impact. This is consistent with the industry in Western Europe, (regional average: 52% negative, 23% positive).
  • 56% of agri-food businesses in Belgium delayed payments to suppliers (regional average: 45%), while 29% increased the amount of time and resources spent on chasing unpaid invoices (regional average: 37%).

Approach to credit quality assessments

  • After the onset of the economic crisis, the sector changed the way they approached credit checks. Information provided directly from B2B customers along with financial statements and credit reports from specialist agencies are now the most common sources for creditworthiness assessments in the industry.
  • The sector gives priority to evaluating the customer’s profitability and ability to generate cash. The majority told us they would continue to monitor these areas over the coming months, along with the customer’s financial flexibility and ability to withstand unexpected shifts in the business and economic environment.

Approach to credit management

  • Following the onset of the economic crisis, the industry intensified the use of self-insurance, requesting payment guarantees and speeding up the debt collection process. Over the coming months, the survey respondents told us they plan to make wider use of self-insurance, outstanding invoice reminders and payment guarantees.
  • 61% of respondents expect to see improvement in customer creditworthiness, while only 20% expect deterioration. This compares to 54% expecting improvement in Western Europe and 16% expecting deterioration.
  • 52% of the industry considers the greatest challenge to profitability in 2021 to be maintaining adequate cash flow. This compares to 44% with the same concern at regional level.

2021 industry outlook

  • 61% of respondents expect the domestic economy to improve over the next six months (regional average: 57%). 30% expect it to get worse (regional average: 27%). The majority of businesses are optimistic about the outlook for the global economy (51% optimistic, 38% pessimistic) and international trade (58% optimistic, 30% pessimistic).

Chemicals

Late payments and cash flow

  • Late payments in the Belgian chemicals industry affect 50% of the total value of B2B invoices ( up from last year’s 34%). 40% of respondents reported having to wait longer to cash in overdue invoices, up to 25 days on average. For 50% of respondents, there was no change in average invoice-to-cash turnaround, while only 10% cashed in overdue invoices earlier than before the pandemic.
  • Average DSO increases of up to 10% were reported by 64% of respondents. 36% reported increases of above 10%. Currently DSO in the industry stands at a 140-day average. This is well above the 83-day average seen in Western Europe.
  • 57% of the industry told us their cash flow was negatively affected by the outbreak of the pandemic (regional average: 39%). 50% reported a negative impact on revenue (regional average: 53%).
  • Late payments caused 36% of respondents to increase the time and resources spent on chasing unpaid invoices (regional average: 39%). 36% delayed payments to suppliers (regional average: 32%). And 36% laid off staff (regional average: 30%).

Approach to credit quality assessments

  • After the onset of the economic crisis, businesses changed the way they approached credit checks. Information provided by customers, financial statements and credit reports issued by specialist agencies are now the most common sources for creditworthiness assessments in the industry.
  • Industry respondents told us they prioritise evaluating their customers’ financial flexibility. Over the coming months, businesses also plan to monitor their customers’ ability to generate cash more closely.

Approach to credit management

  • Following the onset of the economic crisis, survey respondents used factoring more frequently and began to self-insure against bad debt. Over the coming months, 60% of respondents told us they plan to make wider use of self-insurance and to offer discounts for early payment of B2B invoices more often than they did before the pandemic.
  • 54% of the respondents expect customer creditworthiness to improve over the coming months (regional average: 49%). 21% expects deterioration (regional average: 22%).
  • 54% of the industry believes the greatest challenge to profitability in 2021 to be the effective collection of outstanding invoices (regional average: 38%).

2021 industry outlook

  • 64% of the Belgian chemicals industry expects the domestic economy to improve over the next six months (regional average 58%). 25% expects it to deteriorate (regional average: 29%). 39% expressed optimism about the global economy, with a minority of 28% anticipating deterioration. 46% predicts a decline in international trade (regional average: 36%).

Construction

Late payments and cash flow

  • Late payments affect 63% of the total value of B2B invoices in Belgium’s construction industry (up from last year’s 23%). 36% reported having to wait longer to turn overdue invoices into cash, up to 10 days past the due date on average. 54% reported no change in average invoice-to-cash turnaround. Only 4% cashed in overdue invoices earlier than before the pandemic.
  • Average DSO increases of up to 10% were reported by 64% of respondents. Increases above 10% were reported by 25% of businesses. Currently DSO stands at a 91-day average (regional average: 70 days).
  • 50% revealed revenue levels were negatively affected by the pandemic downturn (regional average: 49%). 18% reported a positive impact (regional average: 25%). The opposite appears to be the case with cash flow in Belgium’s construction industry, with 32% reporting a positive impact (regional average: 21%) and 21% negative (regional average: 39%).
  • 29% of respondents delayed payments to suppliers (regional average: 36%). 25% requested bank overdraft extensions, 25% also spent more on time, costs and resources to chase unpaid invoices and 25% reported enacting hiring freezes.

Approach to credit quality assessments

  • Information sourced directly from customers, financial statements, trade references and credit reports issued by specialist agencies are now the most common sources for credit checks in the industry.
  • Businesses prioritise evaluating the customer’s financial flexibility and ability to weather unexpected shifts in the economic and business environment. The majority plan to continue to monitor these areas over the coming months.

Approach to credit management

  • Survey respondents told us they strengthened their credit management practices by: practising self-insurance, requesting payment guarantees and asking for payment in cash. Looking ahead, businesses told us they additionally plan to send overdue invoices to collection much earlier and to make a wider use of trade credit insurance.
  • 39% expects customer creditworthiness to improve over the coming months (regional average: 48%). 25% expects it to get worse (regional average: 17%).
  • 57% of the industry considers the greatest challenge to profitability in 2021 to be the containment of costs (regional average: 43%.) Effective collection of outstanding invoices ranks second with 54% of the responses (regional average: 42%).

2021 industry outlook

  • 64% of respondents expect the domestic economy to improve over the next six months (regional average: 57%). 14% expects it to get worse. 46% expects the global economy to improve, with 14% expecting it to decline. 57% expects international trade to grow, 25% reduce.

34%

of the businesses surveyed in Belgium said they plan to continue applying the same trade credit policies they adopted at the start of the pandemic to encourage domestic sales (regional average: 31%).

Atradius Payment Practices Barometer – November 2020

Construction materials

Late payments and cash flow

  • Late payments in the construction materials industry affect just over 40% of the total value of B2B invoices (compared to last year’s 26%). 22% of respondents reported having to wait longer to cash in overdue invoices, up to 10 days on average. However, for nearly 70%, there was no change in the average invoice-to-cash turnaround. Only 8% reported cashing in overdue invoices earlier than they did before the pandemic.
  • Average DSO increases of up to 10% were reported by 74% of construction materials businesses. Increases of DSO above 10% were reported by 11%. Currently DSO stands at a 140-day average (regional average: 91 days).
  • 45% of respondents told us the economic crisis had a negative impact on their revenue (regional average: 47%). 35% reported a negative impact on cash flow (regional average: 32%).
  • 26% of the Belgian construction materials industry laid off staff (regional average: 34%). 28% told us they delayed payments to suppliers (regional average: 27%).

Approach to credit quality assessments

  • After the onset of the pandemic, the Belgian construction materials industry began to source credit information directly from the customer more often and plan on continuing to do so in addition to monitoring financial statements and payment records.
  • Survey respondents prioritise evaluating the customer’s financial flexibility and ability to generate cash. They plan to continue with this approach next year.

Approach to credit management

  • The Belgian construction materials industry told us they strengthened their credit management practices by offering discounts for early payment of invoices and requesting payment guarantees. They said they also began to practise self-insurance and plan to continue doing so over the coming months.
  • 39% expects customer creditworthiness to improve next year. The same percentage expects it to deteriorate. At regional level, 39% are optimistic and 28% pessimistic.
  • 50% of the construction materials industry considers effective debt collection to present the greatest challenge to profitability in 2021 (regional average: 42%). Containment of costs ranks second with 43% of respondents in the industry (regional average: 49%).

2021 industry outlook

  • 44% expects the domestic economy to improve over the next six months (regional average: 51%). 33% expects it to deteriorate. 37% expects the global economy to improve and 33% expects deterioration. However, only 30% international trade to improve while 37% expects it to get worse.

Consumer durables

Late payments and cash flow

  • Late payments in the Belgian consumer durables industry affect 48% of the total value of B2B invoices (compared to last year’s 27%). 30% of respondents reported having to wait longer to cash in overdue invoices, up to 21 days on average.
  • Average DSO increases of up to 10% were reported by 71% of consumer durables businesses. Increases of more than 10% were reported by 20% of businesses. Currently DSO stands at a 35-day average (lower than the regional average of 61 days).
  • 43% told us their revenue was negatively affected by the pandemic (regional average: 49%). 33% reported a positive impact. A similar pattern was seen with cash flow with 33% reporting ill effects (regional average: 42%) and 14% saying they had experienced a positive impact.
  • 24% of the industry most often laid off staff (lower than the 33% in Western Europe overall).

Approach to credit quality assessments

  • Following the onset of the economic crisis, the consumer durables industry began to source credit information directly from the customer more often and now use this data alongside financial statements and credit reports issued by specialist credit agencies.
  • The industry prioritises evaluating the customer’s ability to generate cash, alongside profitability and financial flexibility. Survey respondents say this approach will remain unchanged over the coming months.

Approach to credit management

  • The Belgian consumer durables industry told us their credit management practices now chiefly include self-insurance and payment guarantee requests (reported by 62% for each). Over the coming months, they plan to continue with this approach in addition to sending outstanding invoice reminders more often.
  • 57% of industry respondents in Belgium (regional average: 50%) believe their B2B customers’ creditworthiness will improve over the coming months. 19% believe it will deteriorate (regional average: 23%).
  • 62% of respondents in the Belgian consumer durables industry believe that containment of costs presents the greatest challenge to profitability in 2021 (regional average: 40%).

2021 industry outlook

  • 48% of the consumer durables industry expects both the domestic and global economies to improve over the coming months. (38% expects both to get worse). 57% expressed optimism about international trade, 29% pessimism).

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