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News | Receivables insurance

The slowdown in economic growth is changing the behaviour of companies in the area of credit risk management

The slower pace of economic growth is driving companies to push for the faster collection of their trade receivables. While in 2017, according to Euler Hermes (EH), the global leader in insurance of receivables, economic growth enabled greater customer-friendliness and the average maturity of receivables increased by two days, in 2018 there was already a global decline of one day, to 65 days.

4.6.2019, Tomáš Jurík

Given the expected decline in economic growth, EH expects a further decline to 64 days in 2019. The uncertainty of economic development is pushing companies to take a more responsible approach to part of their business assets, which is receivables. Data and trends vary by country and industry. Mediterranean countries are demonstrating a return to unpopular late payment practices (Italy +5, Greece +2, Spain +1). North America, Switzerland, Belgium and the United Kingdom report a decline in the same indicator. At the same time, these regions and countries are among those with the shortest maturity.

Maturity of receivables

The “leader” in this statistic is still China, where, despite a one-day decline, debt collection takes an average of 92 days. According to a survey by Atradius, up to 36.3% of all B2B claims in China are past due, which is more than the regional average of 29.8%.

Basically, all receivables insurance companies in the Czech and Slovak markets recorded an increase in overdue receivables reporting. This is a signal that the volume of claims in 2019 may increase. We expect that by 2020 at the latest, there will be a turnaround in the payment discipline of companies in Slovakia and the Czech Republic, and that the number of overdue receivables will increase significantly,” said Tomáš Jurík of Arfin Broker.

This is confirmed by an estimate of the number of bankruptcies and restructuring according to Coface’s statistics. It expects a 5% increase in Slovakia and 4% in the Czech Republic in 2019.