Businesses in the Americas say maintaining adequate cash flow this year is one of their biggest challenges, the September 2013 Atradius Payment Practices Barometer finds.
In Canada and the U.S., foreign B2B receivables represent a greater threat than domestic. In the U.S., 6.7% of foreign and 4.5% of domestic receivables were written off as uncollectable. In Canada, 5.9% of foreign and 4.3% of domestic receivables went uncollected.
In Mexico and Brazil domestic receivables are a bigger issue for survey respondents. In Mexico, 6.4% of domestic B2B receivables went uncollected versus 5.5% of foreign receivables. In Brazil 7.7% of domestic and 7.3% of foreign B2B receivables were uncollectable.
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The survey highlights that,despite modest economic improvement, generating and maintaining sufficient cash flow is a priority. Insolvency trends, slow sales growth, financing and payment defaults are contributing to the challenge.
Compared to businesses in Europe, collection of foreign receivables is consistently a greater challenge for business respondents in the Americas. Whether due to inexperience in exporting, inconsistent payment practices, language or cultural barriers, or less use of external credit management resources, businesses in the Americas struggle more with foreign invoice collections.
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Slow-paying customers are also resulting in long DSO (Days Sales Outstanding).
This is also likely to have a negative impact on cash flow. At 58 days, the average DSO of survey respondents is almost twice the 31-day average payment term.
Brazil has the highest average DSO at 86 days and the U.S. the lowest at 41 days. Canada averages 51 days, and Mexico’s average is 55 days.
Brazilian respondents however have a more relaxed disposition regarding their DSO. The percentage of Brazilian respondents who said that they only begin to be concerned about DSO when it exceeds the average payment term by more than 90 days is notably higher than the survey average.