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Majority of Very Late Payments Remain Uncollected in the Americas

Debt stock-photo-19707862-debts (1)More than half of the value of B2B receivables over 90 days past due were written off as uncollectable by businesses in Brazil, Canada, Mexico and the United States (the Americas).

The September 2014 edition of the Atradius Payment Practice Barometer, a survey of B2B suppliers in Brazil, Canada, Mexico and the US, found that, on average, 38.4% of the total value of survey respondents’ receivables were unpaid by the due date. The survey noted 5.2% of the value of invoices extended more than 90 days overdue, and 2.7%—or approximately 52% of the total value of invoices that were 90 days past due—were written off as uncollectable. This compared to an average of 35% for Europe.

Survey respondents in the Americas maintain a strong focus on credit management, as 81.5% of the respondents in the region reported employing credit management policies to mitigate B2B trade credit risks. Approximately 50% of the respondents check their buyers’ creditworthiness, request secure forms of payment, or both.

Replies to the survey also highlight that late payments led to a marked disparity between the average payment terms for the region (28 days) and the average Days Sales Outstanding (48 days). A key credit management factor, as this gap highlights, the risk of non-payment with large spreads between the two can present a real reason for concern. It underlies why nearly one-third of the survey respondents said that maintaining sufficient cash flow this year has been the greatest challenge to their business’ profitability.

David Huey, regional director of Atradius Trade Credit Insurance NAFTA commented: “The economy may be showing signs of recovery, but late payments, defaults and business failures remain facts of life. The survey results simply underline the need for all businesses to be vigilant in their credit management.”

Source: Atradius N.V.

The complete report highlighting the survey findings of the 2014 Atradius Payment Practices Barometer for the Americas can be found in the Publications section of the Atradius website.

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