Credit Management
From crisis to opportunity:
the future of B2B trade and credit management By Mark Hoppe*
Mark Hoppe
As we start to see the light after a tumultuous period of uncertainty, businesses are beginning to turn their attention to growth. These are the risks and opportunities CFOs and credit managers need to pay attention too.
of late payments more efficiently and will also facilitate company growth by helping businesses explore new opportunities including extending more credit to existing customers and new customers and finding new markets to explore.
Pandemic invoice write offs have more than doubled
Tariffs continue to disrupt supply chains, so how are businesses managing budgets?
The Atradius Payment Practices Barometer survey has revealed that an increase in the use of credit has led to a rise in write offs and overdue invoices with 5% of all credit sales written off as uncollectable more than doubling the 2% average recorded prior to the pandemic. The same story applies to late payments, 54% of business invoices are overdue (compared to 21% in the prepandemic year). As the customer credit risk environment becomes more challenging with more businesses selling on credit, the insolvency environment is likely to increase. A write off rate of 5% represents significant loss. As businesses look to grow during this time of economic uncertainty, it’s important they continue to employ strategic credit management measures such as credit insurance to minimise the risk of payment defaults. This will help protect businesses from the increased risk of customer bankruptcy, help them manage the additional volume
Atradius recently held a worldwide virtual event on The impact of trade relationships and tariffs on global trade and 43% of event survey respondents said tariffs had a slightly negative effect on their business. A further 42% of these business went on to alter their approach to budget planning, mainly reducing discretionary spending like travel and training, reducing capital expenditure and increasing the price of their products or services to counteract the tariff costs. One of the key drivers of the trend towards de-globalisation is protectionism and we expect trade relationships and tariffs to continue delivering shocks to businesses around the world. So the only thing that is certain is that uncertainty will continue. To reduce disruption and continue growing many businesses are looking to diversify supply chains and take advantage of the opportunities this can present to enter new markets and find new buyers. ➤
July 2021 • CREDIT MANAGEMENT IN AUSTRALIA 45
