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Overdue B2B receivables in Americas hit cash flow

Companies in the Americas are taking longer to pay suppliers and nine out of 10 companies experience late payments, with half of all invoices not being paid on time, according to the annual B2B payment practices survey results released last month by Atradius.

The survey of companies in the US, Canada, Brazil and Mexico found that:

  • the average payment duration increased from 61 days in 2017 to 63 days in 2018;
  • on average, 90.3 per cent of respondents frequently experience late payments;
  • Mexico has the highest average of companies experiencing late payments (94.4 per cent) followed by the US with 90.9 per cent;
  • on average 50 per cent of invoices are unpaid by the due date;
  • 21.5 per cent of respondents have had to correct cash flow;
  • 20.3 per cent had to postpone payments to suppliers; and
  • 17.5 per cent have lost revenue;
  • the proportion of total B2B sales on credit declined to 41.3 per cent.

Bad debt 'plagues' B2B markets

Atradius's David Huey, president and regional director of US, Canada and Mexico stated: “It is interesting that in a healthy, growing economy, bad debt continues to plague the B2B markets. To think that 51 per cent of respondents have had a customer suffer bankruptcy or simply close their doors is eye opening. Any business that provides customer credit, domestically or internationally, will benefit from the data reported in the Payment Practices Barometer.”

Comparing this year's survey results with figures from previous years, it becomes apparent that time to payment has increased considerably since 2014, when the average time to payment was 45 days, while in 2018 companies might wait on average 63 days for payment.

Delayed payments from foreign customers

But there is good news in that the rate of uncollectable B2B receivables in the four countries surveyed has decreased in the past three years, from 2.1 per cent in 2017 to 1.8 per cent this year. The US has the lowest rate of uncollectable recievables (around 1.3 per cent), while Brazil has an enduring problem with 2.5 per cent of receivables having to be written off – a level that has remained constant since 2016. This is due to the country's high level of bankruptcies, as 54.7 per cent of respondents in Brazil said customers had filed for bankruptcy.

The main reasons for payment delays by domestic B2B customers in the Americas are:

  • insufficient availability of funds (49.6 per cent of respondents); and
  • the buyer using outstanding invoices as a form of financing (24.7 per cent).

However, 32.6 per cent of respondents said that complexity of the payment procedure is a major factor in delaying payments from foreign B2B customers.

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