Bulgarian businesses exhibit a risk-averse approach due to rising late payments and bad debts, with approximately 43% of B2B sales transacted on credit. Most companies have maintained stable credit policies amid economic uncertainty, opting to extend rather than restrict credit terms, typically ranging between 30 to 60 days. Nearly 60% of B2B invoices are overdue, largely due to customer liquidity issues, with bad debts accounting for over 10% of invoices. Days Sales Outstanding (DSO) remains stable or worsens, while inventory turnover is flat or negative, straining cash flow. In response, Days Payables Outstanding (DPO) has increased as businesses delay supplier payments to preserve liquidity. Invoice financing is the primary external funding source, followed by bank loans and trade credit. To mitigate risks, 40% of companies rely on internal provisioning, while others prefer a combined approach including outsourced credit risk management involving insurance.
Looking ahead, 71% of businesses expect an increase in B2B customer insolvencies, with DSO remaining unchanged or worsening and inventory levels stagnating or rising. Sales growth forecasts are subdued, with many anticipating flat performance or declining profitability. Companies are prioritizing resilience, focusing on liquidity protection, credit risk management, and adapting to regulatory and economic shifts. Key industry insights reveal varying challenges and financing trends across sectors:
- Agri-food: Balancing customer terms with financial stability is a primary challenge, with late payments and credit fraud being significant concerns. The main sources of financing are bank loans (47%), trade credit (33%), and invoice financing (24%).
- Pharma: Trade credit offerings have increased, with 42% of B2B sales on credit. Overdue payments affect 63% of invoices, and bad debts exceed 10%. The leading source of external funding is invoice financing (57%), and 77% expect rising insolvencies.
- Steel and metals: Credit offerings have risen to support customer relationships, with 44% of B2B sales on credit. Overdue payments now affect 66% of invoices, and bad debts average over 10%. Invoice financing is the preferred external funding method, and almost all companies expect rising insolvencies.
The survey highlights increasing regulatory burdens, rising production input costs, and talent retention as major challenges for the future. Bulgarian businesses are emphasizing stability, relationship management, and strategic risk mitigation to navigate the volatile trading environment.
