Longer DSO and an increase in bad debts create a perfect storm for Western European companies as they grapple with the problem of maintaining sufficient working capital.
Key takeaways from the report for Western Europe
The 2024 Payment Practices Barometer survey for Western Europe was conducted between the end of Q1 and the beginning of Q2 2024. The findings should therefore be viewed with this in mind.
Strategic credit management crucial as bad debts and DSO worsen
- This desire for strong customer relations and increased sales is evident in the trend of longer payment terms being offered by businesses in Western Europe. These now average 52 days from invoicing, up from 41 days a year before. Finland has the most lenient payment terms at 71 days, and Greece the strictest at just 32 days. The machines industry is offering the most generous terms among sectors at 64 days.
- Nearly half of all B2B sales among companies in Western Europe are currently being affected by late payments. This is a relatively consistent trend from a year earlier. Bad debts are also steady at 8% of all B2B sales. The hardest hit country is Ireland, while the machinery industry is the sector being most affected by late payments at 58% of all B2B sales. The primary cause of late payments is liquidity issues among B2B customers.
Rising insolvency risk tops complex range of concerns
- 40% of companies across Western Europe anticipate an improvement in B2B customer payment behaviour during the year ahead. Businesses in Ireland report the highest
level of optimism, whereas there is a mostly negative outlook in France. The agri-food industry is the most positive through the region, but the transport sector expresses anxiety about future payment practices.
- A very similar mood is found among businesses in Western Europe about the prospects for Days-Sales-Outstanding (DSO). 34% of companies say they expect improved debt collection efficiency, while the majority of the rest envisage no significant change. Ireland is again the most optimistic, with France and Austria the most pessimistic.
The Atradius Payment Practices Barometer is an annual survey of business-to-business (B2B) payment practices in markets across the world. Its findings can give valuable insights into the current dynamics of corporate payment behaviour in B2B trade. It can also help companies doing business, or planning to do so, in the markets polled to identify emerging future trends in the payment practices of B2B customers.
Interested in finding out more?
For a complete overview of the 2024 survey results for Western Europe, please download the full report available in the related documents section below.
Insights into topics by market and local sectors can be found in the country reports that form the 2024 edition of the survey for Western Europe.
Markets surveyed: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Spain, Sweden, Switzerland and the United Kingdom.
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