KUPEG: Payment discipline worsens

After two years, payment discipline of Czech companies ceased to improve. Payment discipline in the first quarter of this year is still better than the same period in 2014, but payment discipline of Czech companies deteriorated slightly in the second quarter. Measured annually, a failure of customers to pay is expected to be 5.5 to 6%. This follows the payment discipline index from credit insurer KUPEG, the Czech market leader in commercial credit insurance.


"The end of further improvements in payment discipline in the Czech Republic is likely related to the turbulent global economic environment, which arrives here with a slight delay," says Michal Vesely, CEO of KUPEG Credit Insurance, Inc.


Credendo Group, which includes KUPEG credit insurance, recorded a growing number of failures since the beginning of the year by customers in countries affected by a decrease in commodity prices and other macro-economic difficulties. "This applies in particular to China, Russia, Brazil and Saudi Arabia," adds Michal Vesely and continues: "These problems are slowly spilling over to our business partners.  For example, where Germany’s failure rate was one-fifth of the Czech Republic’s (1.1% of customers), we expect the worse and failure in 1.8% of buyers this year. German companies are still very solid partners, but not like before. "


The highest rate of recorded payment failures this year by KUPEG were in Poland, Kazakhstan, Brazil, Greece, Mexico and Russia.


KUPEG insured receivables for CZK 197 billion last year, with 46% of this amount being exports.  Therefore, they insured 2.6% of Czech exports.