Payment practices report

November 2020: 2021 business optimism prevails over cash flow pressures

Survey results for Ireland

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 Ireland.

Stuart Ramsden,

Atradius Country Manager for the United Kingdom and Ireland commented on the report

With its close trading relationship with the UK, at the start of the year many of Ireland’s economic concerns centred around the uncertainties of Brexit. Then came COVID-19. The speed with which the pandemic took hold and led to lockdowns and stay at home orders took many by surprise. Many businesses have struggled. Late payments and write offs have increased, along with business concerns about maintaining cash flow.

It is in these conditions that businesses can benefit from trade credit insurance. The insurance provides peace of mind, but more than that, the market knowledge that Atradius brings offers businesses a great springboard into exploring markets and generating growth. Businesses in Ireland are currently using trade credit to drive business growth. We are well placed to help support that.

Key takeaways

58% of B2B sales in Ireland involve trade credit Trade credit is currently involved in 58% of the B2B sales of the businesses surveyed in Ireland. This compares to the 55% average for Western Europe.

Majority of businesses opt to maintain credit policies The majority of businesses reporting no change the 32-day average payment terms for the country are largely in line with last year’s 28 days.

Late payments increase by 76% year-on-year Following the onset of the pandemic, the total value of overdue invoices increased from 29% to 51%. This represents 76% year-on-year increase.

Businesses seek credit information direct from customers Following the onset of the pandemic, 49% of businesses told us they began sourcing credit information directly from the customers more often.

Businesses largely optimistic about 2021 growth The majority of survey respondents told us they expect to see an improvement in their customers’ creditworthiness, the global and domestic economies and international trade next year.

Despite negative impacts of pandemic, businesses in Ireland remain upbeat

Compared to pre-pandemic levels, Ireland’s use of trade credit has declined a little. Last year 65% of the total value of B2B sales was made on credit, this year it is 55%. This is, perhaps, a hint of caution by businesses grappling with the lockdowns imposed to limit the spread of the COVID-19 pandemic, combined with the shadow of Brexit. However, despite an increase in late payments, the majority of businesses who took part in the Payment Practices Barometer Survey told us that they are largely optimistic about business growth in 2021 in the domestic and global economies and international trade.

Some changes in credit policies did occur after the onset of the pandemic, such as the trend that has become commonplace across Europe, to seek credit assessment information direct from customers. However, for the most part, businesses in Ireland have chosen to maintain the same credit policies, with a majority committing to a greater use of self-insurance next year. There are still many unknowns concerning the pandemic. Will frequent lockdowns be required during 2021? Much will depend on how the virus mutates and whether an effective vaccine can be rolled out. Most of the businesses we spoke to acknowledged these challenges and told us that maintaining adequate cash flow presents the main business challenge facing them next year.

Ireland: top 5 challenges to business profitability in 2021

If you have any questions about protecting your receivables send us a message so we can try and address your specific needs.

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