Germany

Overview

The German chemicals industry is the largest in Europe and the fourth largest in the world, with about 2,000 companies acting as suppliers to almost all industrial sectors.


The German chemicals association VCI expects production to increase and turnover to decline this year as producer prices continue to decrease. Domestic demand is expected to remain subdued due to modest industrial growth, while exports are expected to pick up.


Despite the rather subdued performance in recent years, most German chemicals companies remain generally satisfied with their business situation. Given the persistently low oil price, most companies still do good business, even with decreasing sales.


Generally, German chemicals businesses have robust equity, solvency and liquidity. Profit margins are expected to remain stable.


Payment practice

The German chemicals sector’s payment behaviour has always been better than average with no notable payment delays. In our experience, payments take, on average, 45 days – even fewer for domestic payments, as most chemicals products are exported to destinations with longer payment terms than the domestic market. We have seen no change in payment behaviour or increase in notifications of non-payment in the last six months, and this trend is expected to continue.

Risk

Germany is vulnerable to the economic slowdown in many major emerging markets like China, Brazil, and Russia, with the last two's economies even contracted.


Increased international competition forces many chemicals businesses to immediately pass on lower commodity prices to customers.


Business investment growth is forecast to slow down to 2.8% from 3.1% in 2018 due to global trade uncertainty and labour supply constraints weigh on the construction sector. This feeds into the expected lacklustre GDP growth of 1.3% this year.

Solutions for mitigating trade risk

Third-party collections

Should your debtors fail to meet their payment obligations, Atradius Collections can help by initiating a professional collection process. We focus on the relationships between you and your debtors at all times.

Our team of collection specialists carry out the collection process in-house, contacting the debtors both verbally and in writing whilst adhering to federal and state laws. When there is a dispute, we aim to reach an amicable solution between you and the debtor. We do this by analysing all contractual documents (e.g. signed contracts, orders, confirmations, invoices and delivery notes, as well as all standard terms previously agreed upon).

All investigations are completed with the assistance and agreement of our legal team.

Legal collections

If third-party collections do not yield results, we would consider taking legal action after consulting with you. Entering into legal proceedings is possible without a prior warning to the debtor. However, all courts are trying to mediate between creditors and debtors, and, in order to shorten the amicable phase of the legal proceedings, they may ask for proof that all pre-court efforts did not reach a conclusion and will ask to see all prior correspondence in order to reach a fast and final judgment.



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