Article by Ciaran Canning, Business Development Manager, of leading trade credit insurer Atradius in Ireland
2020 has been a year like no other. While uncertainty has been the buzzword of recent times, businesses have experienced no greater uncertainty than what 2020 has brought.
Covid-19 quickly accelerated into a global pandemic with a catastrophic impact on health, businesses and the global trade environment. Simultaneously, the Brexit conundrum has rumbled on and while the transition period is set to end on December 31, negotiations continue meaning Irish businesses have no clarity on how they can trade with the UK in 2021. Between Brexit and the unknown path of coronavirus, the future horizon for Irish businesses is clouded at best.
The toll on businesses is clear. The latest Payment Practices Barometer by Atradius reported late payments in Ireland increased by 76% year on year. Nearly half (48%) of Irish businesses reported having to grant longer payment terms following the start of the pandemic; a third of these businesses doing so to provide short-term finance to their customers. This can be risky as the longer receivables remain unpaid, the lower the likelihood of collecting them. The Barometer found an average of 10% of the total value of receivables was written off as uncollectable after the onset of the pandemic; accounting for a significant €1 in every €10 billed.
Repeated closures, supply-chain disruptions and changes in demand have created a pressure-pot environment for businesses. Unfortunately for some, it will be too much to bear. While economic uncertainty will invariably impact predictions, the latest Atradius Insolvency Report forecasted a jump of 19% in Irish business failures in 2020 with just a 1% year-on-year decline on this in 2021.
The most astute businesses are clear that action needs to be taken now to mitigate against economic uncertainty and to position themselves robustly for the future. Irish businesses report increasingly using credit management techniques to counter risk; from sourcing credit information directly from customers more frequently to focusing on customers’ ability to generate cash and cope with the unpredictable shifts of the economic environment. And for the ultimate protection of their biggest assets, credit insurance buffers firms from the detrimental impact of non-payment.
These actions all form part of a robust risk management strategy which is absolutely essential in today’s climate as it has never been more important to comprehensively assess and navigate risk. Make sure you know your customer, how they are performing and communicate with them effectively so you can understand the risks they are facing. When it comes to Brexit, review your terms and conditions; are they suitable for any new potential export trading rules? Many Irish businesses have not had to do customs declarations in many years. To be Brexit ready, Irish businesses need the resources to complete these and can avail of the government support from Enterprise Ireland and the Irish Exporters Association.
As a trade partner, Atradius supports businesses throughout every step of the journey; identifying new opportunities, managing risk, providing real-time expert intelligence into individual buyers and the macroeconomy as well as providing protection from the detrimental impact of non-payment. With the right preparation and support, businesses can equip themselves to navigate uncertainty and seize the opportunities for growth no matter what the future brings.”
For more information, contact Ciaran Canning of Atradius Ireland by emailing firstname.lastname@example.org or calling +353 1 242 0109. And for a suite of free economic, payment and country reports, visit the publications pages of the Atradius website https://atradius.ie
Atradius is a global provider of credit insurance, bond and surety, collections and information services, with a strategic presence in over 50 countries. The products offered by Atradius protect companies around the world against the default risks associated with selling goods and services on credit. Atradius is a member of Grupo Catalana Occidente (GCO.MC), one of the largest insurers in Spain and one of the largest credit insurers in the world. You can find more information online at https://atradius.ie/
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