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Payment defaults continue to drop, says Atradius

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Payment defaults for UK businesses continue to drop quarter-on-quarter as some industry sectors begin to overcome economic challenges according to the latest Payment Practice Barometer from the UK’s second-largest trade credit insurer, Atradius reveals data for Q2 2024 has fallen 17% compared to Q1 2024.  

However, the prolonged economic and sector challenges are having a significant impact on some business sectors, with increases in payment defaults for metals, transport, and paper companies, despite transport and paper sectors faring better in the second quarter of the year in comparison to the first.

As the economy slowly returns to life, improved demand has helped companies in sectors including construction materials, food and transport, where claims fell by 32%, 31% and 30% respectively from Q1 – Q2 2024, with construction in particular witnessing a 28% drop in payment defaults quarter-on-quarter.

Additionally, exclusive insight into Atradius’ Payment Practices Barometer reveals a 29% increase in invoices paid on time, with 40% of all B2B sales currently affected by late payments, mainly due to liquidity issues among customers.
 
Despite these figures, the Payment Practices Barometer reveals that B2B invoices paid on time have increased by 29% year-on-year from 2023, painting a promising picture for businesses finances moving forward.

“It is very encouraging to see the declines in default rates across most sectors, as businesses start to benefit from the gradual uptick in the economy.  However, businesses still very much have a battle on their hands, as consumers continue to face high prices, the cost-of-living crisis persists, and we’re still waiting for an interest rate cut to bring down borrowing costs,” says James Burgess, Head of Commercial and insolvency expert, Atradius.

“This could make the second half of the year challenging for many firms.  Amid the ongoing challenging conditions, companies need to be aware of how to protect themselves against the domino effect of insolvency.  It remains crucial for businesses to protect themselves with trade credit insurance, enabling them to trade with confidence and explore new markets or products.”