Payment practices report
November 2020: domestic credit grows amid export caution
Survey results for the Netherlands
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 the Netherlands.
Tom Kaars Sijpesteijn,
Atradius Country Manager for the Netherlands commented on the report
2020 has been a time of unprecedented uncertainty for businesses in the Netherlands and 2021 still poses many unanswered questions. The fact is, we cannot know whether the COVID-19 pandemic will be brought under control next year and whether a vaccine will become available. The key for business is to find a way to trade regardless of the contagion.
Businesses in the Netherlands have been proactive in their approach to promoting trade. For instance 40% of businesses surveyed for the Payment Practices Barometer told us they made a more extensive use of trade credit insurance after the onset of the pandemic.
Not only will they be benefiting from the peace of mind that their ledgers are protected from the risk of bad debts, they will also have access to our extensive knowledge on the health of businesses throughout the world and will be in a strong position to make sound business decisions.
Many businesses also reported a commitment to self-insurance. It is good that these businesses have the reserves ready to absorb bad debts and accept the hit of a write-off. However, self-insurance works best when combined with other credit management tools, such as trade credit insurance, to protect accounts receivables from the risk of repeated late payments and write-offs.
Businesses turn to trade credit in a bid to increase domestic sales In a notable change from the Netherlands’ strong export focus, businesses have increased the amount of trade credit offered to domestic customers in a bid to grow local sales.
10% of receivables are written off during pandemic To turn overdue invoices into cash, businesses had to wait longer than last year (on average 25 days past the due date, compared to 10 days last year), losing 90% of the value of their B2B receivables that were not paid within 90 days.
Businesses in Netherlands lengthen payment terms in a bid to win sales 46% of survey respondents reported granting longer payment terms than before the pandemic, on average up to 21 days longer than the same point last year.
Buyers and suppliers work closely together to enhance credit check process After the pandemic-induced downturn, 45% of businesses reported working more closely with customers to source credit information and accessing this more frequently than bank references.
Businesses upbeat about 2021 despite challenges of pandemic recession Although concerned about cost containment and cash flow, most businesses in the Netherlands are largely positive about the 2021 outlook for the domestic and global economies and the future of international trade.
Domestic trade credit grows amid business caution, although overall optimism regarding 2021 prevails
Over the past five years businesses in the Netherlands were enjoying something of an economic rebound. Admittedly the economy was beginning to dip more recently in the light of lower demand from France and Germany and the uncertainties surrounding Brexit, however, on the whole, the economic picture was fairly stable. Then came the COVID-19 pandemic, leading to lockdowns and work-from-home orders. The effect on the economy was mercurial in speed, leading to an historic recession and widespread upheaval.
In the midst of this pandemic downturn, we conducted this year’s Payments Practices Barometer survey. It offered us a valuable opportunity to talk to businesses directly and to take the pulse of business health through payments performance indicators. It also gave us the change to benchmark the results against last year’s survey.
The results show a stark increase in late payments and write-offs. Interestingly for the Netherlands, with its long-standing focus on export trade, the survey shows a preference for offering trade credit to domestic rather than foreign customers. Although this is likely to be a sign of business caution, the survey also showed a high degree of optimism, with most businesses expecting to see growth in domestic, global and international trade next year.