Nearly 90% of respondents to a recent survey about payment practices in Brazil, Canada, Mexico and the United States, reported having offered trade credit to either domestic or foreign business-to-business customers. Respondents were more inclined to sell on credit to domestic customers, however, according to the September 2015 edition of the Atradius Payment Practices Barometer. Almost half of the total value of domestic B2B sales was made on credit, compared with 40% of sales made to customers abroad.
Of the four countries, U.S. respondents tend to use trade credit in transactions and have no clear preference for selling on credit to domestic (51%) or foreign (46%) buyers. In the remaining three countries surveyed, respondents were more likely to trade on credit with domestic than with foreign B2B customers. “On average, 50% (Mexico and Brazil) or less (Canada) of the value of domestic B2B sales and 38% (Canada, Mexico) or less (Brazil) of the value of foreign B2B sales was made on credit terms,” Atradius noted.
The findings suggest that respondents in the Americas “perceive trading on credit with foreign B2B customers to be more complex and to pose more risks than selling on credit within their own country, where they are more familiar with local trade patterns and business practices,” the firm reported.
Compared with previous payment practices surveys of the Americas, over the past two years, no significant fluctuation in the proportion of domestic B2B sales on credit has occurred. The trend in foreign credit-based sales appears to be more volatile. “After a sharp drop in 2014, export sales on credit increased again this year, most notably in the U.S. (by 10 percentage points, compared to a 5.7 percentage point increase for the region),” Atradius noted. “This oscillating trend may reflect the heightened commercial and political risk landscape at global business level, which continues to pose various.”
Courtesy National Association on Credit Management (NACM)