Switzerland: write-offs doubled in some sectors

Introduction

In this year’s Payment Practices Barometer survey, we looked more closely at how three industries were faring eighteen months after the outbreak of the pandemic and the global recession. Chemicals, steel/metals and transport all reported a challenging 2021, with sharp deteriorations in customer payment behaviour and big increases in write-offs. That said, concerns over the health of the domestic economy and certain industries triggering liquidity shortfalls and increasing credit risk, are very widespread. This may explain why many businesses believe trade credit will largely be offered by businesses seeking to support their customers with informal access to short-term finance.

Key takeaways from the report

• Businesses polled across Switzerland told us that on average 58% of the total value of their B2B invoices were overdue. This is up from 46% last year.
• Write-offs of uncollectable B2B receivables increased to 11% of the total value of B2B sales on credit, up from 6% last year.
• Nearly half of the businesses polled in Switzerland that opted to manage customer credit risk internally told us that, over the past year, they incurred higher administration and   collection costs. Reported cost increases were most often associated with external financing.
• 54% of the business polled we spoke to used credit insurance this year.
• Looking into 2022, 84% of the Swiss businesses polled anticipate growth in 2022 and 69% believe B2B customers' payment practices will improve.
• However, there are widespread concerns over the health of the domestic economy and certain industries triggering liquidity shortfalls and increasing credit risk over the coming months.
• When asked which pandemic-induced changes will become a permanent feature of the way they do business, 55% of businesses told us increased digitalization and 52% said the
  ability of cope with the pandemic-induced changes in customer demand.

Interested in getting to know more?

The Payment Practices Barometer report for Switzerland gives insights into B2B payment practices and businesses' approach to the management of customer credit risk in the following local industries:

• Chemicals
• Steel/Metals
• Transport

For a complete overview, please download the full country report available in the Related documents section below. The Statistical Appendix and regional Payment Practices Barometer survey results are also available free to download.

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