Atradius’s Payment Practices Barometer 2024 report reveals Australian organisations are using trade credit increasingly amid economic pressure

May 02, 2024 – Atradius, a world-leading provider of trade credit insurance and debt collection services, has unveiled its latest Payment Practices Barometer 2024 report, providing vital insights into business-to-business (B2B) payment trends and the broader economic implications for Australian organisations. Based on data from the company’s annual survey, conducted in the first quarter of 2024, Atradius’s Payment Practices Barometer 2024 report provides a detailed examination of how Australian businesses are adapting their payment practices in response to the evolving economic and trading environment. 

Joe Lewis, head of client services, Oceania, Atradius, said, “Based on Atradius’s research, there has been a significant impact of rising interest rates on an organisation’s borrowing. With a sharp decline in borrowing capacity, 59 per cent of companies have pivoted away from traditional bank loans to instead prioritise trade credit, which has risen by 35 per cent.  

“It’s clear that businesses are under increasing pressure to fund their customers’ short-term cash flows through extended payment terms and higher credit limits. Understanding the shift towards more flexible payment practices and the strategic use of trade credit is essential for organisational leaders looking to manage their cash flow effectively and mitigate financial risks.” 

The Payment Practices Barometer 2024 report sheds light on the steady rates of bad debts and unchanged payment delays, indicating a complex credit risk landscape. It also points to a considerable percentage of companies experiencing requests for repayment plans, underscoring the liquidity concerns faced by many Australian businesses. The survey’s findings are critical for understanding the dynamics of corporate payment behaviour and the emerging trends that could shape the future of B2B trade in Australia. 

Key research findings: 

• 59 per cent of organisations have turned to trade credit as an alternative to traditional bank loans, with a 35 per cent increase in trade credit offered to B2B customers 

• payment terms have been extended by nearly two weeks, now averaging 35 days from invoicing, particularly in the construction industry 

• bad debts remain steady at seven per cent of all B2B invoices, with late payments affecting 45 per cent of all B2B sales made on credit cards 

• 64 per cent of companies reported an increase in requests for repayment plans from B2B customers, highlighting concerns over liquidity and financial stability 

• despite financial challenges, 55 per cent of businesses do not foresee an increased risk of insolvency in the next 12 months. 

Joe Lewis said, “As organisations in Australia and around the globe continue to adapt to a rapidly changing economic environment, strategic credit management becomes even more important. Companies that are proactive in adapting their payment practices and credit management strategies will be better positioned to navigate the uncertainties of the market and capitalise on growth opportunities.” 

In a time of economic uncertainty, detailed insights into changing trends and behaviours are more crucial than ever for businesses looking to secure their financial position and foster sustainable growth. The Payment Practices Barometer 2024 report is an essential tool for organisational leaders, policymakers, and economic analysts, offering a comprehensive overview of the current state of B2B payment practices in Australia. It provides a basis for understanding the challenges and opportunities in the Australian market, empowering companies to make informed decisions regarding their credit management and business strategies. 

To view the full report, and access detailed analyses and recommendations for Australian organisations operating across various sectors, visit https://atradius.com.au/article/2024-payment-practices-barometer-australia.html. 

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About Atradius  
Atradius Australia is one of the leading credit insurers in the region providing tailored risk management solutions. We have a reputation for providing innovative solutions and for building strong relationships with our customers and their brokers. We operate with a team of locally based underwriters, account managers and collections specialists. We’re committed to working closely with you to better understand your business and build strong relationships.