The payment behavior of Brazilian companies is affected by a bleak economic situation

Survey on the payment behavior of Brazilian companies in 2016

75% of the companies surveyed received requests to extend payment terms from their clients.

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The first survey of Coface about him payment behavior of companies in Brazil, carried out for 120 companies, reveals that they still have to face a difficult environment. Although 2017 has just begun, the forecast for GDP is not very good. Although the recession is expected to exit, growth of only 0,4% is expected.

 

Almost half of companies reported a deterioration in the payment experience, due to the financial difficulties of their customers.

 

Credit sales are common practice in Brazil. Almost all of the companies surveyed (97%) offer their clients this possibility. This practice reflects a highly competitive market, as the number of respondents alleging treasury problems on the part of their clients was surprisingly low.

 

The gloomy economic environment has negatively affected the payment behavior of companies. The majority (58%) observed an increase in unpaid in 2015 compared to 2014. The result for 2016 has been more divergent, since the survey indicates that the payment experience has deteriorated compared to the previous year for 46% of companies. For the majority of them (79%), the average non-payment does not exceed 30 days. The same percentage declared that the situation remained stable in 2016, while a minority (8%) has observed positive developments.

 

Only 13% of companies declared having a debit balance greater than 5% (ratio between the amount of sales that are paid late over the overall turnover). For almost 40% of companies this ratio is between 0,5% and 2% of turnover.

 

 

Credit sales are common in Brazil. 97% of Brazilian companies offer their clients this possibility, mainly for competitiveness reasons

 

 

 

According to 57% of those surveyed, the reason that clients most frequently give when requesting extensions of payment terms They are “financial difficulties”, followed by a “high default rate in their client portfolios” and “buyer management difficulties”. Furthermore, 81% of companies have mentioned the economic recession as the main macroeconomic foundation with an impact on the results of its clients.

 

Political instability is also significant – and is unlikely to abate any time soon. The political uncertainty index EPU corroborates this perception (see graph below – the higher, the worse). In the period from the beginning of the Car Wash operation in March 2014 to December 2016, the index rose around 247 points.

 

The most effective action in case of non-payment

 

The vast majority of Brazilian companies (78%) believe that the most effective tool to resolve non-payments is friendly negotiation.

 

However, fulfilling a contract in this country is not easy. According to him 2017 Doing Business Index, this process can take an average of 731 days and cost 20,7% of the amount of the claim. For comparison, the average for the Latin American region is 749 days, with a cost of 31,3% of the incident.

 

When it comes to insolvencies, the majority of companies surveyed (58%) noted an increase in clients filing bankruptcy (Chapter XI) in the last year. In 2015, an increase of 55% was reported compared to 2014. In 2016, a new increase of 45% year-on-year was observed. Among companies that reported an increase in contests, 53% reported no changes in their customers' payment behavior before the contest. In recent years, the resource “Chapter XI” has become widespread in Brazil, affecting companies of various sizes and sectors.

 

Delays in payments in different sectors

 

In all the sectors analyzed, the proportion of companies affected by late payment is 75%, with high delays in almost all sectors. The Information and Communications Technologytogether with Construction, are the most affected, with 100% of their companies experiencing payment problems. Surprisingly, the least affected sector is retail sales (36,8%).

 

The average duration of payment delays is 30 days. The only sectors that have reported delays of more than 121 days are Construction and the sector Agrifood. Finally, it is worth noting that none of the companies in our study exceeded 150 days of delay.