According to Atradius, this concern, which reflects the feeling of widespread uncertainty in Europe, is exacerbated by the many challenges that companies in the region will face in the future short and long term.
The companies interviewed were from Central and Eastern Europe they appear to be flexible and have a strong ability to adapt and respond to the challenges of a difficult economic environment. More than half of companies (60%) expect that the current economic crisis will lead to an increase insolvencies in the next 12 months, while 33% expect new challenges in the short and long term to affect the global business environment. This will explain why companies 10% more than last year are increasing the use of different credit risk management to protect the company’s capital level.
Three out of five companies expect an increase in breaches from their B2B customers in the next 12 months. This is the result of a survey conducted on more than 1,700 companies in eight countries in Central and Eastern Europe (Bulgaria, the Czech Republic, Hungary, Poland, Romania, Slovakia, Slovenia and Turkey) and “Atradius payment trend barometer in Central and Eastern Europe – 2024 edition”, by Atradius, one of the world leaders in the field of commercial credit insurance, creditors and debt collection in Italy and abroad.
The figure reflects the widespread feeling of insecurity in Europe, and confirms the number of equity firms in Western Europe who share these concerns.
The expectation that the consequences of the increase in insolvencies will have on business performance is strengthened by the fear of new financial problems that companies will face in the coming months. In this context of worsening credit risk, companies have focused their efforts on improving credit risk management, to protect profits from the negative effects of the increase in insolvency among B2B customers.
This new approach to risk management is proven by Atradius research, which shows that the majority of companies in Central and Eastern Europe (+10%) have increased the use of trade credit insurance in the last 12 months , leaving credit risk management. from inside the equipment. 56% of companies that pay their bills from B2B customers reported that this option proved to be the best for reducing bad debt, thus freeing up money to spend on work and investment. The latter appears to be the business sector most affected by the impact of credit risk from B2B customers, with more than one in three companies experiencing this impact.
The proactive approach to credit risk management, which includes the increased use of factoring and letters of credit, shows the resilience and flexibility of Central and Eastern European companies to cope with the difficult conditions of the current economic situation . Also, this will explain why 34% of companies surveyed in the region are optimistic about the forecast of B2B customer payment behavior in the coming year. Continuing with the necessary credit management will help companies reduce the risk of late payments and bad debts, helping to improve payment practices among companies, even if it will the possibility of growing insolvencies that will affect other economically weak companies. .
Concerns also emerge from the Barometer on payment practices in Central and Eastern Europe about other problems that companies will face in the short and long term. About 33% of businesses in the region are particularly concerned about the negative impact of the difficult economic situation on business transactions and investments. These concerns are exacerbated by other critical factors that, in general, affect the business environment and require companies to adopt a strategic and robust credit risk management system.