Businesses trading in the Americas have been warned about potential payment delays in a new report by trade credit insurer Atradius.
The Atradius Payment Practices Barometer is an annual research report into the payment behaviours of global businesses and was prepared ahead of the recent natural disasters that have severely impacted parts of the region. The report found that over 25% of the value of B2B invoices in Brazil, Canada, Mexico and the United States remain unpaid more than 90 days past due – reported by one in two businesses in these countries. As a consequence of late payment by their customers, 35% of these businesses had to either delay payments to their own suppliers or take specific measures to avoid severe disruptions to cash flow.
Late payment was experienced most frequently within the US – 96%, compared to 93% of respondents in both Mexico and Brazil and 89% in Canada. For US businesses, late payment from domestic B2B buyers translated into an average of 45% of the value of receivables being paid late. The Atradius report also found that 1.5% of the value of domestic B2B receivables and 0.6% of the value of foreign B2B receivables in these markets was written off as uncollectable, with Mexico and Brazil being hardest hit. Overall, 50% of businesses in the Americas, write-offs arose due to the customer being bankrupt or out of business. Debts were also written off where the debt was too old (35%), collection attempts had failed (34%) or where the customer could not be located (33%).
Stuart Ramsden, Head of Commercial for Atradius UK & Ireland commented: “Uncertainty continues to challenge the global economy and to weigh heavily on the business environment. Inevitably there is an impact on payment behaviour and this recent report highlights the effect felt in the Americas. By being aware of the potential risks and payment trends in the region, British businesses trading in these markets are better equipped to manage their sales portfolio and moreover their own cash flow. The results of our report clearly show that, in the current economic climate, businesses are concerned about the impact of late payments on their liquidity position. Non-payment is perhaps the biggest risk a business can face while late payments can create significant difficulties for cash flow and liquidity. It is essential for businesses to focus on B2B receivables management and credit insurance, to avoid cash flow disruptions.”