Overview of payment practices

By industry

Agri-food

Late payments and cash flow

  • Late payments in the agri-food industry in Ireland affect 48% of the total value of B2B invoices (significantly up from last year’s 30%). 49% of respondents reported having to wait longer to cash in overdue invoices, up to 23 days on average. For 42%, there was no change in the average invoice-to-cash turnaround, while the remainder cashed in overdue invoices earlier than before the pan- demic.
  • Average DSO increases of up to 10% were reported by 50% of respondents (regional average: 57%). 41% reported increases of above 10% (regional average: 35%). Currently DSO in the industry stands at a 112-day average. This compares to the 108-day average in Western Europe.
  • 61% of respondents told us their revenue was negatively affected by the pandemic downturn (regional average: 52%). Cash flow difficulties were reported by 52% of respondents in the country, significantly higher than the 37% in the region.
  • 57% of agri-food businesses in Ireland increased the amount of time and resources spent on chasing unpaid invoices (regional average: 37%). 54% delayed payments to suppliers (regional average: 45%).

Approach to credit quality assessments

  • After the onset of the economic crisis, the industry changed the way they approached credit checks. Information provided directly from B2B customers along with financial statements and bank references are now the most common sources for creditworthiness assessments in the industry.
  • The industry gives priority to evaluating the customer’s profitability and ability to generate cash. The majority of respondents in Ireland told us they would continue to monitor these key 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 pandemic downturn, the industry intensified outsourcing the debt collection process and requested cash payments more often. Over the coming months, businesses told us they plan to make wider use of self-insurance, in addition reducing reliance on a single buyer to avoid concentration of trade credit risk.
  • 64% of respondents in the industry expect to see improvement in customer creditworthiness, while only 10% expect deterioration. This compares to 54% expecting improvement in Western Europe and 16% expecting deterioration.
  • 61% 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

  • 63% of respondents expect the domestic economy to improve over the next six months (regional average: 57%). 13% expect it to get worse (regional average: 27%). The majority of businesses are optimistic about the out- look for the global economy (48% optimistic, 29% pessimistic) and international trade (48% optimistic, 26% pessimistic).

43%

of Irish businesses identified maintaining adequate cash flow as the primary challenge facing them next year. Fall in demand ranks second among major business concerns (41% of respondents in the country).

Atradius Payment Practices Barometer – November 2020

Consumer durables

Late payments and cash flow

  • Late payments in the Irish consumer durables industry affect 58% of the total value of B2B invoices (compared to last year’s 31%). 37% of respondents reported having to wait longer to cash in overdue invoices, up to 10 days on average. For 56%, there was no change in the average invoice-to-cash turnaround, while the remainder cashed in overdue invoices earlier than before the pandemic.
  • Average DSO increases of up to 10% were reported by 47% of consumer durables businesses. Increases of more than 10% were reported by 41% of businesses. Currently DSO stands at a 26-day average (more than half the regional average of 61 days)
  • 41% told us their revenue was negatively affected by the pandemic (regional average: 49%). 51% reported a positive impact (regional average: 33%). Negative impact on cash flow was reported by 43% (regional average: 42%) and 50% told us they had experienced a positive impact (regional average: 32%).
  • To safeguard liquidity levels, 49% of the industry increased the amount of time, resources and costs to chase unpaid invoices (higher than the 40% in Western Europe overall).

Approach to credit quality assessments

  • Following the onset of the pandemic downturn, the industry began to source credit information directly from the customer more often and now use this data alongside financial statements, bank and trade references.
  • The industry prioritises evaluating the customer’s past payment history and ability to generate cash, alongside financial flexibility. Businesses say this approach will remain unchanged over the coming months.

Approach to credit management

  • The industry told us their credit management practices now chiefly include self-insurance, adjustment of credit terms and outstanding invoice reminders. Over the coming months, they plan to continue with this approach in addition to resorting to factoring more often.
  • 54% of industry respondents believe their B2B customers’ creditworthiness will improve over the coming months (regional average: 50%). 13% believe it will deteriorate (regional average: 23%).
  • 59% of respondents believe that bank lending restrictions present the greatest challenge to profitability in 2021 (regional average: 34%). Fall in demand ranks second, gathering 58% of responses (regional average: 45%).

2021 industry outlook

  • 35% of respondents expect the domestic economy to improve over the coming months (regional average: 57%). 25% expect it to get worse (regional average: 25%). The majority of businesses are optimistic about the outlook for the global economy (52% optimistic, 28% pessimistic) and international trade (70% optimistic, 19% pessimistic).

Construction

Late payments and cash flow

  • Late payments affect 51% of the total value of B2B invoices in Ireland’s construction industry (up from last year’s 24%). 64% reported having to wait longer to turn overdue invoices into cash, up to three weeks past the due date on average. 16% reported no change in average invoice-to-cash turnaround. 20% 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 33% of businesses. Currently DSO stands at a 42-day average (regional average: 70 days).
  • 67% told us they experienced revenue losses due to the pandemic downturn (regional average: 49%). 13% reported a positive impact (regional average: 25%). In regard to cash flow, 41% reported experiencing liquidity issues (regional average: 34%), while 23% reported a positive impact (regional average: 28%).
  • To keep operating costs under control, the industry laid off staff and enacted hiring freezes. This was reported by 37% of respondents in each case. Regional averages: 34% and 24% respectively).

Approach to credit quality assessments

  • Business polled in the industry told us that they did not change their approach to customers’ credit quality assessments as a consequence of the pandemic downturn. Financial statements, trade references and credit information sourced directly from customers are now the most common sources for credit checks in the industry.
  • Businesses prioritise evaluating the customer’s profitability, ability to generate cash and weather unexpected shifts in the economic and business environment. The majority plan to continue to monitor these areas over the coming months, alongside having a stronger focus on the borrowing capacity of the customer.

Approach to credit management

  • The industry told us they strengthened their credit management practices by requesting payment guarantees and practising self-insurance against bad debt. Over the coming months, businesses told us they additionally plan to send overdue invoices to collection much earlier and to make a wider use of self-insurance.
  • 64% expects customer creditworthiness to improve over the coming months (significantly higher than the 48% regional average). Only 4% expects it to get worse (regional average: 17%).
  • 58% of the industry considers the greatest challenge to profitability in 2021 to be disruptions to the supply chain (regional average: 36%.) Maintaining adequate cash flow ranks second with 44% of the responses (regional average: 47%).

2021 industry outlook

  • 43% of respondents expect the domestic economy to improve over the coming months (regional average: 57%). 36% expects it to get worse (regional average: 25%). As to the outlook for the global economy, 57% of respondents expects it to improve, with 37% expecting it to decline. 56% expects international trade to grow, 40% reduce.

Ict Electronics

Late payments and cash flow

  • Late payments in the ICT/electronics industry in Ireland affect 57% of the total value of B2B invoices (compared to last year’s 40%). 34% of businesses told us it took 21 days longer on average to cash in overdue invoices. 52% reported no change, while the remainder told us they cashed in overdue invoices earlier than a year ago.
  • Average DSO increases of 10% or more were reported by 51% of survey respondents. DSO increases of up to 10% were reported by 45%. Currently DSO stands at a 100-day average (well above the 73-day industry average in Western Europe).
  • 47% of survey respondents suffered revenue shortfall following the onset of the economic crisis, lower than industry level in Western Europe. The percentage of respondents reporting a negative impact on cash flow is higher than the regional level.
  • To avoid liquidity shortages, 48% of respondents spent more on time and resources chasing unpaid invoices, (regional average 57%).

Approach to credit quality assessments

  • After the onset of the economic crisis, the industry changed the way they approached credit checks, sourcing information directly from B2B customers more often than before the pandemic. Customer information, financial statements and bank references are now the most often used sources for creditworthiness assessments in the industry.
  • ICT/electronics businesses in Ireland give priority to evaluating their customers’ past payment history and ability to generate cash. Industry respondents told us they plan to maintain this approach over the coming months.

Approach to credit management

  • Following the onset of the COVID-19 economic crisis, many businesses from the country’s ICT/electronics industry started offering discounts for early payment of invoices, and requested payment guarantees from their customers more often. Businesses told us that, moving forward, they plan to speed up their debt collection process to safeguard their business from liquidity issues.
  • 41% of the industry expects their B2B customers’ creditworthiness to improve over the coming months. (regional average: 47%) This is more than the 24% expecting to see deterioration (regional average: 28%).
  • 49% of businesses consider maintaining adequate cash flow presents the greatest challenge to profitability in 2021 (regional average: 37%). 45% of businesses are concerned about the continuation of the economic crisis into 2021 (regional average: 33%).

2021 industry outlook

  • Nearly half of respondents are optimistic about the outlook for the domestic economy over the coming months. Conversely, 32% expects it to get worse. A majority also believes in a brighter outlook for the global economy (52% optimistic, 36% pessimistic) and for international trade (58% optimistic, 31% pessimistic).

49%

of businesses polled in Ireland told us that, after the onset of the pandemic, they began sourcing credit information directly from the customers more often (38% of respondents in Western Europe).

Atradius Payment Practices Barometer – November 2020

Business Services

Late payments and cash flow

  • Late payments in the services/business services sector affect 44% of the total value of B2B invoices (compared to last year’s 24%). 59% of respondents reported having to wait longer to cash in overdue invoices, up to 15 days on average. For 35%, there was no change and the remainder reported cashing in overdue invoices earlier than before the crisis.
  • Average DSO increases of up to 10% were reported by 52% of the businesses. Increases of more than 10% were reported by 42% of businesses. Currently DSO stands at a 60-day average (above the 92-day average for the sector in Western Europe).
  • 46% of businesses told us they experienced cash flow difficulties caused by the pandemic downturn (regional average: 44%). 52% experienced revenue losses (54% in the region), and 48% reported drop in sales volume (44% in the sector at regional level).
  • 44% of businesses spent more on time, costs and resources to chase unpaid invoices (regional average: 40%). 41% suspended delivery of services until payment of invoices (regional average: 25%).

Approach to credit quality assessments

  • Businesses polled in the Irish services/business services told us that, after the onset of the economic crisis, they made wider use of information provided directly by the customer for credit assessments. Now they use these alongside financial statements, bank references and credit reports issued by specialist agencies.
  • Businesses prioritise evaluating the customer’s financial flexibility and ability to generate cash. They told us that, due to the economic crisis, they will retain this focus over the coming months alongside monitoring the customer’s profitability.

Approach to credit management

  • Following the onset of the economic crisis, the sector’s primary credit management practices include: requests for payment guarantees and trade credit insurance (56% of respondents each). A large proportion of respondents said that they resorted to self-insurance against bad debts. Over the coming months, businesses told us they plan to continue with this approach.
  • 46% of industry respondents believe their B2B customers’ creditworthiness will improve over the coming months (regional average: 48%). In contrast, 38% believe it will deteriorate (regional average: 28%).
  • According to 46% of businesses the continuation of the economic crisis presents the greatest challenge to profitability in 2021 (regional average: 39%). 36% cited maintaining ad- equate cash flow (regional average: 43%).

2021 industry outlook

  • The services/business services sector is divided about the outlook for the domestic economy over the coming months (48% expect it to improve, 46% to get worse). In contrast, the sector expects a gloomy outlook for both the global economy (38% optimistic, 57% pessimistic) and international trade (43% optimistic, 48% pessimistic).

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