Additional time is needed to fully assess the economic impact of the COVID-19 pandemic on the Canadian economy
Introduction
GDP in Canada contracted in both the first and second quarters of this year, despite the measures taken to help mitigate the downside risks and provide economic stimulus through financial support to businesses. That said, it is thought that these interventions will help in the longer term, and economic growth in Canada is expected to bounce back over the coming months.
Against this backdrop of uncertainty, it is essential that businesses navigate these challenging economic times with a strategic approach to credit management. This needs to include measures aimed at ensuring adequate cash flow levels and a sound liquidity position to guarantee or support the continuity of the business.
Key takeaways from the report
- Value of B2B credit sales on the rise in Canada
- Inefficiencies in Canadian banking system blamed for many late payments
- Most industries in Canada expect payment practices to deteriorate in coming months
- The majority of businesses predict growth in sales and profits
Key survey findings for Canada
Based on the results of the Atradius Payment Practices Barometer survey in Canada, there was an increase in the total value of B2B sales made on credit compared to one year ago (63%, up from 57% last year). In these challenging economic times, the increased use of B2B trade credit in Canada probably reflects higher pressure on businesses to sell and grow market share to offset the squeeze on profits, as well as the challenge
to protect sales against competition.
Moreover, as the creditbased B2B sales were reportedly made chiefly on the domestic rather than export markets, it is reasonable to assume that many businesses in Canada resorted to domestic supplier credit to fill a gap in short-term trade financing during these
times of strained cash flow.
Interested in getting to know more?
For a complete overview of the payment practices in Canada and in the agri-food, chemicals, steel/metals, services and construction materials industries in the Canada please download the complete report.
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