Businesses in Mexico express business optimism; in Canada, only a minority anticipate growth
AMSTERDAM and HUNT VALLEY, Md., July 7, 2021 /PRNewswire/ -- Differences in how governments have managed the pandemic may be behind contrasting results in this year's Payment Practices Barometer survey. 81% of businesses in Mexico anticipate growth over the coming year. In Canada, however, this percentage plummets to just 36%. Businesses in the U.S. reported a sentiment that falls about halfway between these two extremes.
Gordon Cessford, Regional Director for North America, said: "There will be a wealth of reasons behind this dichotomy. While the cohort of interviewees may well play a part, it is likely that businesses in each country worked through differing pandemic experiences. In Mexico, a light touch governmental approach to lockdowns meant that many businesses continued to trade without interruption. In Canada, the reverse is true."
What's more, Canada's central government implemented a raft of support measures for businesses. In Mexico, most business support was driven by local projects and implementation was patchy across different regions.
Andreas Tesch, Chief Market Officer for Atradius noted the impact that differing government fiscal policies may have played. He said, "Businesses in Canada and the U.S. may be bracing themselves for the withdrawal of government support packages during the second half of this year. Most financial observers predict an uptick in business insolvencies at this point. The pessimism expressed by businesses in Canada is likely to reflect their anticipation of a heightened risk environment."
This survey was conducted in Q2 2021, a full year after the World Health Organization declared Covid-19 a global pandemic. In addition to capturing views reflecting business confidence, the survey took the pulse of business health through the key performance indicators of trade credit preferences, payment terms, DSO and credit management.
In the USMCA region, the survey revealed that more than half of all B2B sales were transacted on credit and 44% of businesses actually increased their use of credit following the outbreak of the pandemic. In terms of the three countries comprising the USMCA region, the U.S. reported the highest percentage of late payments and write-offs. Despite the optimism expressed by businesses in Mexico, the pandemic tops the list of business concerns across the region. In particular, businesses cited the unpredictability of the pandemic alongside safeguarding liquidity levels as their top two concerns.
Atradius is a global provider of credit insurance, surety and collection services, with a strategic presence in over 50 countries. The credit insurance, bond and collection products offered by Atradius protect companies around the world against the default risks associated with selling goods and services on credit. Atradius is a member of Grupo Catalana Occidente (GCO.MC), one of the largest insurers in Spain and one of the largest credit insurers in the world. You can find more information online at https://group.atradius.com