A report by credit insurer Atradius reveals that despite a positive economic outlook, many Eastern European companies expect deteriorating payment practices amongst their business partners.

This is expected to prompt sellers to demand more letters of credit (L/Cs) or cash payments from buyers.

Cautious trend

The increasingly cautious trend began some years ago according to Atradius and has prompted sellers to shy away from open account terms.

Nearly 60 per cent of survey respondents now prefer payment terms such as L/Cs or cash in advance.

Country variations

Of the countries surveyed, companies in Hungary, Czech Republic, and Turkey are the most open to selling on credit, while Poland had the lowest average percentage of credit sales at just 28.9 per cent. This low level of credit sales is caused by the perceived risk of payment problems.

The rate of late payments from domestic companies is especially high at nearly 90 per cent while late payments from foreign customers are only slightly lower at 78.9 per cent.

Survey respondents in the Czech Republic were most likely to experience late payments with 95.1 per cent of domestic and 84.8 per cent of foreign invoices paid late.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.