The number of UK exporters anticipating an increase in the risk of non-payment has risen from 27% to 43% year on year, according to a survey conducted by credit insurer Allianz Trade.

An increased perception of non-payment risk emerged across all the countries surveyed – France, Germany, Italy, Spain, Poland, the UK and the US – but the jump was highest in the UK and Germany.

Compared to the underwriter’s early 2022 survey, conducted before the outbreak of war in Ukraine, the share of respondents expecting an increase in export non-payment risk this year rose 11 percentage points to 40%.

The length of export payment terms are also expected to increase, with 42% of the 3,000 respondents surveyed anticipating a rise.

“Companies are facing a combination of lower demand, additional pressure on profitability and squeezing credit conditions as central banks continue to increase interest rates to bring down inflation,” says Aylin Somersan Coqui, chief executive of Allianz Trade.

“In this context, they are clearly bracing for longer export payment terms and higher non-payment risk in 2023,” she says.

Somersan Coqui adds that this finding fits with the underwriter’s outlook for global insolvencies, which are expected to rise by 21% in 2023, versus 2% in 2022.

Overall, more than 80% of UK exporters expect an increase in exports, and 70% of respondents worldwide expect turnover generated through exports to increase, down from 80% in 2022.

In the UK, 57% expect a moderate increase in export turnover of between 2% and 5%, which reflects the more muted outlook for global trade, the report says. Allianz Trade currently forecasts a drop of 0.1% in global trade in terms of US dollars, compared to the increase of 9.7% seen in 2022.

Last year’s Global Survey – which polled respondents both before and after the outbreak of war in Ukraine – found that the crisis exacerbated fears over non-payments, with energy costs a top concern.

This year’s survey paints a similar picture: more than half of UK exporters say they have been disrupted by the energy crisis, and high fuel prices remain their top challenge.

Ways to alleviate supply chain disruption is another key concern among respondents.

Three-quarters of all respondents say that logistics hurdles and high transportation costs are having a “moderate to significant impact on export activity in 2023”, while the chief challenge for companies in the US and Spain is the cost and availability of financing.

“To mitigate disruptions to their supply chains, the top three strategies are monitoring, risk management and ESG due diligence on suppliers,” says Ana Boata, global head of economic research at Allianz Trade.

Plans to move supply chains appear less common, and consolidation is more attractive than investment in new markets, with 63% seeking to increase their investment in existing markets while less than half plan to diversify to new countries.

“Companies that report a fair to severe disruption to their supply chains due to the energy crisis seem to be more concerned with making changes, with 35% expecting to relocate suppliers and production sites in the medium to long-term, against 11% for the least-impacted companies,” adds Boata.

Almost one-quarter of UK exporters surveyed moved their production plants due to the pandemic, the report says. While 25% of those in the UK say they would plan to relocate production or find local suppliers, a greater proportion of US exporters – 40% – would do the same.

Allianz Trade attributes this to UK exporters’ preference for supply chain diversification in regions such as Western Europe and Asia Pacific.

Cash, bank loans and payment terms remain the most favoured means of funding exporters’ plans for development, while in the UK specifically, the top four are payment terms, cash, buy now pay later (BNPL) options and bank loans.

Ano Kuhanathan, head of corporate research at Allianz Trade, underscores the trend towards non-traditional forms of financing like BNPL.

“For companies in the UK and France, this is cited as the third source of financing after cash and bank loans,” Kuhanathan says, suggesting that this could be one way of bridging the trade finance gap for SMEs.