Nearly half of UK businesses expect their customers’ B2B payment behaviour to deteriorate over the next 12 months, amid serious liquidity problems, according to the Payment Practices Barometer 2024, compiled by Crédito y Caución.
64% of UK businesses expect an increase in the risk of insolvency. One reason for this upward trend is the pandemic-related budget stimulus and loans that have increased business costs.
The use of trade credit in B2B strategies plays a very important role in the UK. Nearly two-thirds of sales are made on credit, highlighting its importance in maintaining competitive advantage. 53% of businesses across all sectors use trade credit as their primary source of funding to address treasury issues and the impact of credit risk on their customer portfolio. In this context, late payments affect 40% of credit sales and non-payments account for a further 7%, mainly due to customer liquidity issues.
Risk Management Strategy
Risk management strategy is particularly important for the construction sector, given the decline in demand for residential units. Half of companies across all sectors reported no significant change in average collection period, although 13% saw debt collection efficiency deteriorate, particularly in the construction sector.
The development of the national economy is a major concern for UK businesses, in a context of tight monetary policy that limits access to finance and makes investment difficult. In an economy where the services sector plays a major role, there are growing concerns about rising costs that could lead to higher inflation. Geopolitical uncertainty is another cause for concern for UK businesses in the short term, as it could further destabilise costs and disrupt delivery times, exacerbating inflationary pressures.
In the long term, the main challenge identified by companies across all sectors is the impact of stricter environmental regulations and their implications for corporate operations.
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