Payment practices report

November 2020: maintaining cash flow is major concern for 2021

Survey results for Spain

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 Spain.

Jacinto Iglesias,

General Manager of Crédito y Caución, commented on the report

Most economic pointers suggest 2020 may result in an even deeper recession than 2008/2009. Certainly the downturn resulting from the COVID-19 pandemic has been swift and sharp, leading to a massive rise in overdue invoices across Spain. Despite such negative indices, however, much of the business community remains upbeat about the 2021 outlook.

Widespread use of credit insurance, combined with anti-insolvency support and legislation, has helped insulate many businesses from the more negative economic impacts of the pandemic.

Key takeaways

Domestic market is main target for trade credit 55% of the businesses we spoke to in Spain told us that they use trade credit to grow sales on the domestic market. This is particularly the case among especially SME businesses.

Longer payment terms offered as short-term finance on domestic market A third of businesses lengthened payment terms to encourage sales on the domestic market and just under a third did the same in order to provide short-term financing for customers in financial distress.

52% of the total value of B2B invoices in Spain was overdue during the pandemic Last year just 30% of the total value of invoices was overdue when we conducted our poll. This represents a significant year-on-year increase of 73%.

Credit insurance is most favoured credit management tool for 2021 Credit insurance tops the list of most favoured credit management techniques for 2021. 62% of businesses plan to use credit insurance next year, followed by payment guarantees with 60%.

Maintaining cash flow is major concern for businesses in 2021 Maintaining adequate cash flow presents a significant threat to profitability in 2021 for the majority of businesses polled.

Pandemic halts growth, but fails to snub out cautious optimism for future

Prior to the onset of the pandemic, Spain had been experiencing robust, though modest, growth. Its high insolvency rate was steadily falling and a strong level of employment was buoying the domestic market. Then the pandemic hit and Spain was seriously affected with high rates of infection among the population. The government responded with hard lockdowns, which had an inevitable knock-on effect on the economy and business. However, the Spanish government worked to minimise the economic impact of the pandemic through a freeze on insolvency proceedings and social assistance measures such as unemployment benefits. How well such interventions worked remains to be seen, much still rides on how the pandemic progresses next year.

This year’s Payment Practices Barometer Survey took place after the pandemic had taken hold. Comparing the results to last year has given us a unique insight into how businesses are dealing with the virus and with the subsequent recession. Spain has seen a rapid rise in late payments as well as a significant lengthening of payment terms as businesses scrabble to boost domestic sales and support customers with short-term finance. Looking forward to 2021, although businesses are concerned about pressures on cash flow, most of the respondents to our survey were fairly upbeat about both the domestic economy and international trade next year. This optimism may be rooted in the fact that Spain enjoys one of the highest levels of credit insurance usage in the region, providing both a safety net against insolvency and a springboard for business growth next year.

Spain: top 5 challenges to business profitability in 2021

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