Slovakia: lower overdues but increasing DSO

Barómetro de Prácticas de Pago

  • Slovakia
  • Automoción/Transporte,
  • Productos químicos/Farmacéutica,
  • Construcción,
  • Bienes de consumo duraderos,
  • Electrónica / TIC,
  • Máquinas/Ingeniería,
  • Metales,
  • Servicios

18 sep 2018

Despite improvements in 2018, respondents in Slovakia reported an increase in DSO and 27.5% of businesses seem to have been impacted by late payments.

According to the Atradius findings, 2018 is the third consecutive year in which Slovakia increased its proportion of B2B sales made on credit. Respondents here reported late payments less frequently, a much lower proportion of past due B2B invoices than one year ago and a faster invoice to cash turnaround. However, despite improvements, there was an increase in DSO and 27.5% of respondents reported that their businesses have been impacted by late payments.

A steep increase in credit sales

B2B sales on credit Slovakia 2018

Together with their peers in Hungary, respondents in Slovakia are the most inclined to sell on credit terms in 2018. In contrast to Hungary, where the proportion of total B2B credit sales dropped this year, respondents in Slovakia increased their credit sales significantly. This is the third consecutive year with an increase, and the average proportion of B2B sales made on credit reached 47.5% in 2018 after 30.5% in 2017. Slovakian respondents however are clearly less comfortable selling on credit to foreign B2B customers than to domestic B2B customers (44.1% and 50.9% respectively)

Based on the survey findings, domestic credit sales are mostly to reward long-term business relationships and to attract new customers. Considered common practice in Slovakia, credit sales are also seen as a way to access the market and as a means to facilitate sales. Poor payment behaviour is the main reason for 21.1% of respondents to refuse credit terms.

We trade on credit with our domestic B2B customers because we have a good relationship and we trust them.

Survey respondent, Chemicals sector

The main reasons for granting trade credit to foreign B2B buyers mirror those of domestic B2B customers - to reward loyal customers and to attract new business. The lack of information on the customer’s business or payment performance would cause respondents in Slovakia to refrain from selling on credit to their foreign B2B customers (mentioned by 12.8% of respondents).

We trade on credit with our foreign B2B customers because of their good payment behaviour.

Survey respondent, Electronics sector

Expecting further deterioration in DSO

75.9% of respondents in Slovakia have reported frequent late payments by their domestic and foreign B2B customers, a decrease of five percentage points compared to 2017. This was the most significant decrease across the region. Domestic B2B customers have been reported to pay late more frequently than foreign B2B customers do (86.3%; compared to 65.4%).

In 2018, the proportion of overdue B2B invoices in Slovakia dropped significantly by almost 17 percentage points. More specifically, from 41.5% in 2017 to a low 25.1% this year. This is by far the biggest change in the region and one of the lowest proportions of past due B2B invoices across the Eastern European countries surveyed. 


Past due B2B receivables Slovakia 2018


After a slight decrease from 39 days in 2016 to 38 days in 2017, the average Days Sales Outstanding (DSO) figure increased again this year to 43 days. This may be due to an increase in payments made more than 90 days past the invoice due date by both domestic and foreign B2B customers. 19.8% of Slovakian respondents said that they foresee a slight increase in their company’s DSO in the coming 12 months. The majority of respondents (72.6%) however, do not expect any changes.

A faster invoice to cash turnaround

Payment terms have decreased this year for both domestic and foreign B2B customers in Slovakia. Domestic B2B customers are given, on average, 30 days to settle their invoices; three days shorter than in 2017. Foreign B2B customers are given, on average, 33 days to fulfil their payment obligations; five days shorter than in 2017.

79.4% of respondents in Slovakia stated that they are not likely to differentiate payment terms between domestic and foreign B2B customers. This is the highest percentage in Eastern Europe. Of those who mentioned a differentiation, 12.2% said that they are likely to give their domestic B2B customers longer payment terms while 8.4% are likely to give their domestic B2B customers shorter payment terms. The main reasons for differentiating payment terms in Slovakia are internal policies, domestic payment terms directed by law and industry practices.


Payment duration Slovakia 2018


In 2018, the average payment delay by domestic B2B customers decreased by six days (to 12 days on average) and by three days for foreign B2B customers (on average, 9 days). Based on the decreases in average payment terms and payment delays, the average payment duration in Slovakia dropped from 51 days in 2017 to 42 days this year. This means a faster invoice to cash turnaround for respondents in the country.

Domestic payment delays occurred mainly because of insufficient availability of funds (reported by 64.0% of Slovakian respondents) and buyers using outstanding invoices as a form of financing (42.1% of respondents). The percentage of respondents who reported this latter reason increased significantly in 2018 and is much higher than in the region overall (30.9%). Only the Czech Republic had a higher percentage of respondents (57.0%) citing buyers using outstanding invoices as a form of financing as a top reason for domestic payment delays.


VAT fraud Slovakia 2018


Looking at the main reasons for payment delays by foreign B2B customers, 61.3% of Slovakian respondents reported buyers using outstanding invoices as a form of financing. The percentage of respondents stating this almost doubled compared to 2017 (32.0%) and is by far the highest in the region. The second most frequently reported reason for payment delays from B2B customers abroad is insufficient availability of funds, cited by 32.3% of respondents. 

The majority of Slovakian respondents (72.5%) said that payment delays did not have a significant impact on their businesses. 11.1% said that payment delays led to postponing their own payments to suppliers and 8.8% had to request a bank overdraft extension. For 8.2% of Slovakian suppliers, overdue invoices caused revenue loss.

Respondents in Slovakia mostly invoice electronically


Paper less Slovakia 2018


The majority of respondents in Slovakia (70.2%) said that they are invoicing their B2B customers electronically. In contrast, 27.9% said that they are not invoicing electronically. 1.5% of respondents who said that they are not using electronic invoices but they intend on doing so in 2018. Only 1% said that they are no longer sending invoices online.

58.1% of Slovakian respondents said they don’t believe e-invoicing has a noteworthy effect on payment duration. 41.9% said that e-invoicing led to faster payments by their B2B customers. No respondents experienced a slowdown in payments after invoicing online.

Slovakia also worried about US protectionism and China’s ‘hard landing’

Along with their peers in Eastern Europe, respondents in Slovakia were asked to rank in order of significance the following potential risks to global economic growth: US protectionism turning into a trade war, misguided Fed policy, China’s ‘hard landing’ and geopolitical risk. After Turkey, Slovakia had the second highest percentage of respondents (42.8%) who believe that US protectionism is the most significant risk to global growth. Another 25.9% of respondents in the country agree that – while US protectionism may not be the biggest risk to global growth – it is definitely a significant risk. A low 12.9% of Slovakian respondents disagree with this opinion and consider US protectionism to be the least significant risk to global development. This was also the lowest percentage in the region. 42.0% of respondents in Slovakia (versus 22.0% at regional level) consider China’s ‘hard landing’ the biggest risk to global growth.


UncollectablesB2B receivables in Slovakia 2018


Slovakian respondents struggling with bankruptcy the most

In 2018, the average proportion of uncollectable receivables in Slovakia doubled compared to last year and stands at 0.6%. Despite the increase, Slovakia still has one of the lowest proportions of uncollectable receivables of the Eastern European countries surveyed. Domestic B2B receivables were written off significantly more often than foreign B2B receivables.  

Uncollectable receivables originated most often from B2B customers in the chemicals, construction, consumer durables, machines, transport and services sectors. The main reason for write-offs is the same as the one reported in all the other Eastern European countries surveyed - the customer going bankrupt or out of business – mentioned by 76.4% of respondents. Slovakia had the highest percentage of respondents in the region to mention this. The second most frequently mentioned reason for write-offs was the inability to locate the customer (cited by 23.6% of respondents).

Optimistic about their buyers’ payment behaviour in the coming 12 months

In 2018, B2B customers in the metals and transport sectors enjoyed longer average payment terms (51 days and 41 days respectively) than the country average of 32 days. In contrast, B2B customers in business services are being asked to pay much faster (on average, within 23 days).   

Suppliers in Slovakia reported that B2B customers in the construction and machines sectors are some of the slowest payers. B2B customers in these sectors, paid on average 16 and seven days after the due date. The main reasons for payment delays in the construction sector are insufficient availability of funds (reported by 54.0% of respondents) and buyers using outstanding invoices as a form of payment (mentioned by 49.0% of Slovakian respondents). Respondents in the machines sector reported slow payment for the same reasons (67.0% mentioned insufficient availability of funds and 54.0% buyers using outstanding invoices as a form of financing).


Sector Slovakia 2018


Looking ahead, most respondents in Slovakia do not expect changes in the payment behaviour of their B2B customers in the construction and machines industries. Those who foresee changes are mainly optimistic; 25% of respondents in the construction sector and 18% in the machines sector expect a slight improvement in the coming 12 months.

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