The credit insurer's report also highlighted B2B customers in the sector were transacting on credit for almost half (45%) of sales, with businesses offering credit terms in an effort to boost growth and attract new customers.

Cashflow issues and administrative delays were highlighted as key issues facing B2B customers in regards to late payments, with 40% of the businesses surveyed saying they had seen their DSO (days sales outstanding) double with an average wait of two months longer than the contracted terms. This has presented a threat to suppliers' cash flow, with almost half of the businesses surveyed offering discounts for early payment in an attempt to mitigate the risk.

Atradius' report also revealed an increased use of credit in the sector, with 60% of businesses polled prioritising in-house retention and management of customer credit utilised in order to protect cash flow. Firms also revealed they have enhanced their internal credit risk assessment capability, and are committing more time and resources to chasing unpaid invoices.

Atradius' Payment Practices Barometer conducts a review annually into corporate payment practices, and spoke to businesses in the agri-food sector to find out more about the challenges they are facing, and their view on the outlook for 2023.

The report revealed that while there is general optimism from businesses in the sector when looking forward to 2023, key concerns include the ongoing global economic downturn due to rising energy costs and geopolitical tensions, and the ongoing impact of the Covid-19 pandemic.

Georgios Panzaris, Senior Underwriter at Atradius says:

"There's no doubt that it has been a challenging year for the agri-food industry after the knock-on effects of the Covid-19 pandemic coupled with unprecedented cost inflation, and it's likely the sector will face ongoing challenges as we look forward to 2023.

"With insolvency a real risk, businesses need to do all they can to ensure they are protecting cash flow so they can mitigate the risk of a large customer failing unexpectedly. Payment defaults have a domino effect on supply chains, but this is where trade credit insurance is vital as it allows firms to protect the bottom line, and support them through the uncertain and unpredictable times."