Payment practices report

November 2020: pandemic trade credit increases and signals 2021 business confidence

Survey results for Poland

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 Poland.

Pawel Szczepankowski,

Atradius Country Manager for Poland commented on the report

The Payment Practices Barometer survey results reveal an interesting parallel. During the pandemicinduced recession, the total value of overdue B2B invoices in Poland increased by 44%.

During the same period, 49% of the same survey respondents told us they had turned to trade credit insurance. This could partly explain why, despite a massive year-on-year increase in overdue receivables, Polish industry is largely upbeat about the outlook for 2021.

Of course, trade credit insurance offers more than a bad debt safety net for businesses. The customers we support benefit from our global business intelligence and are able to make informed decisions about their customer base and when to offer trade credit.

This helps them increase their competitive edge, a vital advantage during such stormy economic times.

Key takeaways

Businesses offer more trade credit than before pandemic

Businesses in Poland seek to encourage sales on the domestic market by increasing the amount of B2B trade credit offered to customers. The jump up from pre-pandemic levels was among the largest seen in Eastern Europe.

71% of businesses chase unpaid bills with reminder notes

Most businesses in Poland use outstanding invoice payment reminders (dunning letters) in a bid to minimise late payments. This technique is use more in Poland than anywhere else in Eastern Europe aside from Turkey.

Most businesses in Poland expect the domestic economy to improve in 2021

A majority of businesses in Poland told us that they expect the domestic economy to improve over the next six months (55%). Significantly fewer (34%) believe the domestic economy will deteriorate (34%) over the same timeframe.

Poland sees increase in late payments

Poland experienced an average 76% increase in late payments following the onset of the pandemic. That said, the country’s businesses have been fairly successful in keeping long-term unpaid invoices down and overall the percentage of late payments is in line with regional averages.

Withholding payment to suppliers is widespread in Poland

When facing a squeeze on cash flow, businesses in Poland frequently withhold payment to suppliers until their liquidity improves. This was reported by 43% of businesses in the country, largely in line with regional averages.

Poland: top 5 challenges to business profitability in 2021

Sample: all interviewed companies Source: Atradius Payment Practices Barometer – November 2020

Businesses in Poland better placed than others to weather COVID-19 economic storms

Domestic consumer demand underpins Poland’s economy and in many ways has helped to at least partly insulate it from potential threats such as Brexit, US import tariffs and the coronavirus. In some markets, including neighbouring Slovakia and to a slightly lesser degree, the Czech Republic, B2B credit dropped dramatically as a result of the pandemic downturn, as businesses tried to minimise the risks associated with selling on credit. The story was different for Poland, however, where there was an increase in the use of trade credit. This is clearly a strong sales strategy employed by businesses in an increasingly competitive market. The pandemic-induced economic crisis appears to have had a lighter touch on Poland than in other countries in the region. This can be seen in the survey responses to questions about revenue and cash flow. In Poland 57% of respondents reported a negative impact on revenue and 50% on cash flow. After Hungary, this is the lowest percentage of respondents in Eastern Europe reporting a negative impact due to the coronavirus on profitability. Indeed, some sectors reported very favourable results when compared to regional peers.

For example DSO in the Polish chemicals industry is about 69 days, well below Eastern Europe’s 91-day average. The same sector also reported a 32% negative impact on cash flow, contrasting markedly with the 47% reported by the region as a whole. There are some exceptions to this trend. The construction industry in Poland has struggled and reported results well below the regional average. Most notably 65% of businesses in the Polish construction industry reported the pandemic restrictions had led to a negative impact on their sales volume. The postpandemic regional average for the sector is 59%. Comparing this year’s Payment Practices Barometer survey with last year’s results and with other countries in the region helps us to identify pre and post pandemic actions and trends. We have applied last year’s values a benchmark against which to measure this year’s results throughout this report. Overall for Poland, the survey results suggest that while times are harder this year, businesses in the country are better placed than others in the region to weather the COVID-19 economic storm. Looking forward towards 2021, most businesses told us they expected to see some growth.

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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