Atradius: Turkish B2B Payment Practices Showing Signs of Weakening

Atradius Kreditversicherung has released a report highlighting a decline in business-to-business (B2B) payment practices among Turkish companies. The findings suggest that businesses in Turkey are facing rising payment risks and liquidity pressures due to weakening payment behavior.

The survey reveals that, on average, 41% of B2B sales in Turkey occur on credit, slightly below the Central and Eastern Europe (CEE) average. Medium and large businesses in the construction and trade sectors are the primary drivers of this credit activity. The report indicates a stronger shift towards credit-based B2B trade in Turkey compared to the CEE region. Payment terms in Turkey are notably more relaxed, with 56% of companies offering terms beyond 30 days. Extended payment terms of three months or more are also more common, positioning Turkey as the most flexible market in terms of payment terms within the region as businesses seek to sustain sales.

However, B2B payment behavior in Turkey has worsened in recent months, with more businesses reporting delays than faster settlements, contrasting with more supportive conditions in CEE. In Turkey, 86% of companies report payment delays from customers, and over one-third of invoices are overdue, exceeding the CEE average. Medium-sized firms in the trade sector are particularly affected. The proportion of overdue invoices has further increased, signaling growing liquidity strain. Over three-quarters of businesses cite customer liquidity shortages as the main driver of these delays.

Payment collection is also taking longer, with more frequent reports of payments collected more than two months late in Turkey, contributing to a higher likelihood of credit write-offs. Approximately one-quarter of companies report increasing credit losses, often exceeding 5% of receivables. These payment delays and collection issues have significant operational consequences, with companies in Turkey reporting disruptions to cash flow planning at double the rate seen in CEE.

To manage these risks, Turkish companies are prioritizing immediate cash protection. They are more likely to request cash or secured payments and utilize early payment incentives. Shorter payment terms are also commonly implemented, and credit insurance uptake is higher than in CEE, reflecting increased risk exposure. Looking ahead, more companies in Turkey than in CEE anticipate a rise in insolvency levels in the short term, reinforcing concerns about financial weakness.