North American businesses are relying more heavily on trade credit to support sales, but the working capital cost of that flexibility is becoming harder to ignore. Companies conduct an average of 43% of their business-to-business sales on credit, while seven in ten report delayed customer payments, and overdue invoices account for 23% of receivables.

The Atradius ‘Payment Practices Barometer for North America 2026’ report portrays a market where outright credit losses remain contained for most suppliers, yet late payment is already affecting liquidity, investment and cash forecasting. Short delays rather than entrenched non-payment dominate, but their breadth means even modest slippage can absorb a meaningful share of operating cash.

Late-paying customers reduce liquidity headroom for 31% of respondents. Another 23% say payment risk limits investment, 21% struggle with cash flow planning and 17% delay payments to their own suppliers. Those consequences make receivables performance an operational issue well before an invoice becomes bad debt.

Most businesses expect payment behaviour to hold steady, and two in five think customers will pay faster. Insolvency expectations are harder to dismiss: 62% think the risk will stay elevated and 27% expect it to rise.

Suppliers are still granting terms to protect commercial relationships while trying to stop ordinary arrears becoming permanent losses. Yet an invoice can be paid in full and still do damage, forcing a company to defer investment, fund the gap for longer or reschedule outgoing payments.

Trade credit grows but markets set different limits

Use of trade credit varies sharply by market. Around half of Canadian B2B sales are made on deferred terms, compared with 45% in the US and close to 30% in Mexico. Mexican suppliers therefore show the strongest preference for upfront payment and tighter customer credit policies.

Respondents reported increased use of trade credit during recent months, particularly in manufacturing and trade. Small and medium-sized businesses were the most likely to offer it, using payment terms to attract and retain customers in markets where suppliers may otherwise struggle to differentiate themselves.

Payment windows nevertheless remain relatively short. The 30-day window remains the standard, reported by just under three in five businesses. One-to-two-month terms are also common, while periods beyond two months remain rare.

Mid-sized and large manufacturers are more likely to operate with longer cycles, reflecting larger transaction values and more complicated supply chains. Atradius found the pattern was particularly visible in Mexico, where some suppliers grant longer terms to sustain commercial relationships despite the country’s lower overall reliance on credit sales.

Across the region, most suppliers said their payment terms had remained broadly unchanged. Where companies had altered them, extensions were more common than reductions, especially among trade businesses and respondents in Mexico and the US. Every extension lengthens the wait for cash before the customer is even late.

Exposure to late payment is widespread but uneven. Some 30% report no late invoices, while 41% say between 1% and 30% of their receivables are overdue. A further 26% place the late share between 31% and 60%, while 3% are above 60%. The regional average of 23% therefore masks a smaller group carrying much heavier exposure.

Around half of respondents had seen no meaningful change in customer payment behaviour. Shifts were concentrated among larger trade and construction companies, while late payment was particularly common among mid-sized businesses across sectors and among Canadian respondents.

Cash flow pressure at customers was by far the most frequently cited explanation for overdue invoices, selected by 49%. Banking delays followed at 36%, showing that a substantial part of the problem sits within payment execution as well as the customer’s underlying finances. Complex payment processes accounted for 17% and internal approval delays for 16%.

Some companies face both problems at once. A customer may be short of cash, while banking delays or slow internal approvals hold up the eventual transfer. The distinction matters: the first points to credit risk, the second to a payment process that may still be fixed.

Size offers no simple guide. Smaller companies extend credit most readily, large manufacturers grant longer terms, and mid-sized businesses report the most delays. Sector and customer behaviour matter at least as much as the supplier’s scale.

Short arrears cast a long working capital shadow

Most overdue balances do not remain unpaid for long. Some 71% of past-due invoices are settled within 30 days of the deadline, with another 15% paid between 31 and 60 days late. Equal shares of 7% take 61 to 90 days or more than 90 days to clear.

Atradius says that pattern typically stretches the complete cash-conversion cycle to around two months from invoicing. A supplier granting a 30-day term and then waiting almost another month may ultimately collect the cash, but must finance payroll, inventory and its own supplier obligations during the gap.

Two months leaves little room for a forecasting miss. A receipt expected near a reporting or funding date can slip into the next period, changing borrowing needs or the cash available for investment even when the invoice remains collectable.

Bad debt is consequently less pervasive than late payment. Some 62% of businesses put irrecoverable receivables below 1% of their book, while 14% report a level between 1% and 2%. Another 14% place bad debt between 2% and 5%, with 10% above 5%.

Only 24% therefore report bad debt above 2% of receivables, although the report finds losses somewhat more pronounced among trade companies and in Mexico. Where invoices are written off, customer inactivity or an inability to reach the debtor is more common than prolonged non-payment of a large outstanding balance.

Contained losses do not make the intervening delay costless. Cash tied up in overdue invoices cannot be deployed elsewhere, and uncertainty over its arrival reduces the precision of short-term liquidity forecasts. Financing may be needed for a timing problem even when the underlying sale is eventually paid in full.

Most companies are still absorbing the pressure through day-to-day adjustments. Relatively few report higher capital costs or a lasting loss of financial flexibility, suggesting the strain has yet to become embedded.

Liquidity takes the first hit. Some 31% report reduced headroom and 23% have limited investment. Another 21% struggle with cash-flow planning, while 17% delay payments to their own suppliers.

At that point, one company’s receivable becomes another’s problem. A customer pays late, the supplier delays its own bill, and the pressure travels along the chain without either business formally defaulting.

Suppliers largely favour preventive measures. Many retain a proportion of cash sales or ask for advance payment, limiting exposure at the start of a transaction. Early payment discounts also encourage customers to settle before receivables begin to age.

More formal risk transfer measures, including credit insurance and bad debt reserves, are used by around one-fifth of businesses. Legal action and receivables finance are much less common, suggesting companies generally prefer to control payment risk through credit terms, internal credit management, and incentives rather than respond after a serious arrears problem develops.

That choice makes sense while most arrears clear within a month. Suppliers have more to gain by nudging payment forward than by financing an invoice that may settle before the funding is arranged.

Stable payment expectations meet stubborn insolvency risk

Most companies expect B2B payment behaviour to remain unchanged in the months ahead. Smaller service businesses are especially inclined towards that view, while two in five respondents anticipate faster payment, led by companies in industrial sectors.

Only a minority expect deterioration, although concern is concentrated among mid-sized trading firms. Their less settled outlook shows where the apparently stable regional picture is most vulnerable.

Insolvency views are harder to dismiss. Some 62% expect risk to remain elevated during the next 12 months, 27% anticipate a further increase and 11% are unsure. Taken together, 89% expect insolvency pressure either to stay above normal or worsen.

Those expectations stop well short of a return to normal. The 11% unable to form a view add another layer of uncertainty to decisions about credit limits, payment terms, and liquidity buffers.

Profit expectations provide the brighter note. Nearly half of respondents expect margins to increase over the coming months, while a similar share anticipates no change and only a small minority expects deterioration. Much of that confidence rests on cost control and pricing discipline.

Margins can improve while cash arrives later. Pricing may protect earnings, but it does not remove the need to forecast receivables and funding requirements conservatively.

Economic slowdown ranks as the leading threat to B2B payments during the next year, followed by inflation and cost pressure, then higher interest rates. Geopolitical instability, fraud and supply chain disruption sit further down the ranking, although each may still hit particular industries or counterparties.

Country conditions pull in different directions. Atradius says the US continues to support North American activity, while growth is more constrained in Canada and Mexico. Inflation, tight financing, uncertainty over the USMCA review and volatile energy prices keep the regional outlook fragile.

Stable regional averages offer little comfort if a major customer slips. With credit use expanding and insolvency risk still elevated, cash forecasts depend increasingly on close counterparty monitoring and realistic collection assumptions.

North American suppliers are still using trade credit to win and retain business, and short terms have kept most bad debt under control. The larger threat is the accumulation of ordinary delays: cash forecasts weaken, liquidity headroom narrows, and investment is deferred. As insolvency pressure persists, receivables cannot be allowed to set the wider funding agenda.