The finance sector experienced the worst rise, with a 51% increase in late and failed payments.
Atradius, a UK-based trade credit insurer, has painted a grim picture for the retail sector in its latest report on payment default trends for 2023, revealing a staggering 55% increase in late and failed payments affecting businesses nationwide over the past year.
The retail landscape bore the brunt of the ‘triple threat’ challenge, encompassing a cost-of-living crisis, stagnant inflation, and high-interest rates.
Almost every corner of the retail industry experienced a significant surge in payment defaults, with the finance sector leading the pack, reporting a concerning 51% increase in late and failed payments between 1 January and 31 December last year.
Labour shortages and rising costs dent retail success
Within the retail sphere, services took a considerable blow, including hotels, bars, and restaurants, reporting a substantial 48% increase in late and failed payments.
Labour shortages, escalating costs, and a consumer cost-of-living crisis proved to be formidable challenges for retailers in these segments throughout 2023.
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Chemicals and metals offer glimmer of hope
Despite the widespread challenges, the retail sector witnessed a glimmer of hope in 2023.
Two sectors, chemicals and metals, displayed resilience by reporting a notable 9% decrease in claims, showcasing a positive trend amid the turbulent year for retail.
Atradius, known for providing crucial trade credit insurance, offers a lifeline to retailers by protecting suppliers against the risk of insolvency during the critical period between order placement and payment.
In the absence of such insurance, retailers often find themselves grappling with more stringent payment terms, intensifying the pressure on their cash flow.
James Burgess, commercial head at Atradius, stressed the need for retailers, both large and small, to safeguard their cash flow in the face of the ongoing economic challenges.
He emphasised the pivotal role of insuring supply chains, not only as a safety net but also as a means to access market forecasts and insights, helping retailers navigate potential risks in this dynamic retail landscape.
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