Nearly 40% of respondents of Atradius survey expect economic crisis to end in H1 2010

Recession has had mixed impact on cash flow

Amsterdam, 25 November – 38% of respondents of an Atradius survey looking at the impact of the recession on business in 20 countries expect the economic crisis to end in H1 2010 with 45% anticipating a rebound in business within the same time frame. In both cases more than 60% of respondents expect the crisis to end by year end 2010. The responses are fairly consistent with, if not slightly more cautious than, IMF estimates which signal an end of the recession occurring early in 2010. Despite this, there remain significant concerns about business failures, particularly in distressed industries and the financial services sector.

The Atradius survey, assessed the opinions of 3538 executives and senior managers from companies in Europe, North America, Asia and Australia about their views on various economic indicators, expectations of business failures, the value of government actions to stimulate the economy, changes in their use of various risk mitigation instruments and the impact of various factors on cash flow during the economic crisis.

Overall, government attempts to stimulate the economy are considered to have had a limited impact in most countries. In 17 of the 20 countries surveyed, more than 40% of respondents have experienced no impact from government initiatives to stimulate the economy. More than 10% of respondents in half of the countries have not even noticed that the government has made any initiatives. What respondents are most interested in seeing from the government are the introduction of more tax cuts or tax incentives and a reduction in interest rates.

In general it is expected that cash flow would suffer during the recession, however when looking at it in relationship to specific factors, there are just as many factors that have produced an increase in cash flow as have produced a decrease. The accessibility of financing, availability of credit from suppliers and the number of customers are more likely to have resulted in a decrease in cash flow suggesting declines in these factors. Changes in cash sales, the length of time within which customers pay and the availability of credit insurance have resulted in an increase in cash flow, suggesting an increase in cash sales and advance payments and an increase in the focus on receivables management.

On average, there is a greater tendency across most countries surveyed to increase the use of risk mitigation instruments than to decrease use. This holds true for the use of credit insurance, and not credit forms of risk limitation. Most notably, respondents have stepped up the frequency with which they check the creditworthiness of their buyers. In addition, businesses are paying greater attention to sales and cost issues. Finding new markets or sales channels for products and a heightened focus on customer service have been essential elements of business continuity as have gaining access to financing and reviews of staffing levels.

Isidoro Unda, CEO of Atradius N.V., stated; “The recession has had a big impact on the way many companies are doing business. Although some of the results of the survey suggest the opposite result than might be expected, they do show that businesses are paying more attention to managing their business risks and as a result, in many cases, they have been able to improve the performance of their business. Despite this, the short term sentiment of respondents remains cautious and generally pessimistic, particularly when it comes to business failures. As a leading credit insurer operating in more than 40 countries worldwide, these observations are fairly consistent with what we are encountering on a daily business.”

About the Atradius Economic Crisis Survey

To get an indication of the current impact of the global economic crisis on businesses across the world, businesses in 20 countries around the world were asked about their impressions of the effect of the global economic crisis and their views on its current impact. 3,538 interviews were conducted in August 2009, with 168 Australian companies participating.

View the full Atradius Economic Crisis Survey report.

About Atradius

The Atradius Group provides trade credit insurance, surety and collections services worldwide, and has a presence in 42 countries. Its products and services aim to reduce its customers’ exposure to buyers who fail to pay for the products and services they buy. With total revenues of more than EUR 1.8 billion and a 31% share of the global trade credit insurance market, its products help protect companies throughout the world 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.

For further information please contact
Denise Hung
Marketing Manager
Tel.:  +61 2 9201 2389
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