Majority expect payment defaults to climb; Most anticipate 12 more challenging months

 

Baltimore, MD - June 3, 2008 – More than 2,500 business executives in 14 countries have shared their perspectives on the global credit crisis, its impact on their businesses and their near and long-term outlooks for economic recovery.  While a majority (90%) of U.S. respondents forecast further tightening of credit, only slightly more than half say they are tightening their credit extension practices as a result.

U.S. executives specifically expect payment defaults to have the most significant impact on their businesses (69%); an increase in the cost of capital (67%); inability to raise outside capital (63%); and slow-to-no sales growth (62%) as the top four negative impacts on their performance in the coming year.

“The challenges facing American businesses are mounting, insolvencies are up 44%, and we have seen a significant increase in credit insurance applications over the past three quarters,” says Brett Halsey, CEO, Atradius.  “Protecting receivables and turning them into working capital is an essential responsibility of today’s executive and this survey shows that, now more than ever, U.S. companies are using a variety of tools to stay competitive.”

The survey details a wide range of risk management tools currently in use around the globe.  In the U.S., companies rely most heavily on cash (in advance or upon delivery), while credit management and reminders, letters of credit and guarantees, and use of collections agencies are other popular methods of ensuring receivables.

“The survey confirms well-known issues while going significantly further to explore the methods companies are employing to mitigate their risks in turbulent times,” says Terry Callahan, President, Credit Research Foundation.

Other findings of the survey indicate that almost half of U.S. business leaders do not believe the Federal Reserve and other central banks are doing enough to stimulate the economy, and most feel it is likely that a small number of financial institutions will fail as a result of the credit crisis. 

Respondents, including 2,502 business leaders from throughout Europe, Australia, New Zealand, Mexico and the U.S., were interviewed solely in regard to the impact of global credit on their operations. The survey was conducted by Heliview Research on behalf of the Credit Research Foundation and Atradius Trade Credit Insurance, the sponsor of the study. 

Editor’s Notes:

A complete report is available electronically by contacting: Kathy Farley, Atradius, 410-246-5584 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Interviews with Mr. Callahan and Mr. Halsey are available by contacting:

Matthew Katz, APR, Common Ground Public Relations, 636-530-1235, ext. 226

Atradius

The Atradius Group provides trade credit insurance, surety and collections services worldwide, and has a presence in 40 countries. Its products and services aim to reduce its customers’ exposure to buyers who fail to pay for the products and services customers purchase. With total revenues of approximately EUR 1.8 billion and a 31% share of the global trade credit insurance market, its products contribute to the growth of companies throughout the world by protecting them from payment risks associated with selling products and services on credit. With 160 offices, it has access to credit information on 52 million companies worldwide and makes more than 22,000 trade credit limit decisions daily.

Credit Research Foundation

For over 60 years CRF has operated as a non-profit education, research and training organization for the business credit community. CRF is recognized as the leader in meetings, reports, surveys, books and other media providing valuable information on new techniques and trends in credit, accounts receivable and customer financial administration and practices. The Credit Research Foundation serves its members under the direction of a Board of Trustees. Membership in the Credit Research Foundation is open to all those individuals and businesses that have a vested interest in the credit, accounts receivable and customer financial relationship.