Payment practices report

November 2020: businesses hopeful despite stark downturn in pandemic payments

Survey results for Turkey

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 Turkey.

Taner Isik,

Atradius Country Manager for Turkey commented on the report

The business community in Turkey has traditionally favoured self-insurance and cash payments, particular among SMEs. However with an ever-stronger export industry, the country has seen a growth in trade credit.

For Atradius, this has been especially evident among larger and international enterprises that value the competitive opportunities this adds to their sales strategies. Within the SME segment, State Supported Credit Insurance (SSCI) has been growing in popularity over the past two years. An increase in SSCI thresholds this year coincided with the pandemic downturn and has resulted in a big take-up of this state supported service.

This is also reflected in the many businesses that took part in this year’s Payment Practices Barometer Survey that reported an interest in trade credit insurance, especially to support their business aims over the next six months.

We are monitoring the second wave of the virus carefully. Businesses in Turkey are currently well placed to rebound in 2021, although much hinges on how well the country manages both the health and economic impacts of COVID-19 through the year end.

Key takeaways

Turkey tightens payment terms in a bid to reduce risk Turkey’s pandemic payment terms have shrunk by an average of 17 days. This is likely to be due to the heightened insolvency environment and a bid to reduce exposure to risk.

DSO and late payments soar over pre-pandemic levels The value of overdue invoices grew by 83% compared to pre-pandemic levels. DSO also grew to a 154-day average, substantially higher than the 103-days average for the region.

Payment history and ability to make cash are KPIs for credit assessments in Turkey Once credit information is obtained, businesses in Turkey told us they prioritise assessing the payment histories of their customers, as well as its capability to generate cash.

91% of businesses in Turkey choose to self-insure Nearly all businesses in Turkey are managing the economic crisis by asking for payment up front, sending overdue invoice reminders and preparing to absorb bad debts in house.

Despite economic stresses in Turkey businesses are upbeat about 2021 Most businesses believe the domestic economy, global economy and international trade will all see some improvement over the next six months.

Turkey: top 5 challenges to business profitability in 2021

Turkey braced for pandemic recession but optimistic about next year

Geopolitical uncertainty and a subdued economic performance in some key industries had already begun to cause some payment delays and insolvencies even before the pandemic recession took hold. The pandemic and subsequent lockdown measures exacerbated this situation and have significantly impacted both domestic and international demand. This deterioration can be seen in comparisons to last year’s Payment Practices Barometer survey, the results of which are a valuable benchmark for this year’s survey.

However, despite the challenges faced by Turkey’s businesses many are faring better than their peers in Eastern Europe. 50% of businesses in Turkey reported a negative impact of the pandemic-led economic crisis on revenue, compared to 59% at a regional level, and 48% told us of pressures on their cash flow, compared to 51% across the region. Overall, most businesses in Turkey were optimistic about both domestic and international demand next year.

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