For companies doing business in Eastern Europe, the outlook looks positive on the surface. Countries in the region are seeing their economies improve, thanks to increased domestic consumption aided by tight labor markets, loose monetary policy and fiscal stimulus. But that’s only one layer of the story in Eastern Europe; in reality it’s more complex.

Successfully doing business overseas requires a thorough understanding of the factors impacting the local economy. Because a country’s fortunes can shift quickly, it’s essential to stay abreast of indicators that may predict changes in economic activity. One such indicator is corporate payment behavior within a region or country.

That’s exactly what Atradius, a trade credit insurer, analyzed in its recent payment practices report covering Eastern Europe, which includes survey results from five key markets: the Czech Republic, Hungary, Poland, Slovakia, and Turkey. The report revealed that although the overall economic outlook is positive, many Eastern European companies expect a deterioration in the payment practices of their business partners–a continuing trend from the past few years. In response, these businesses are being increasingly cautious.

What’s behind this pessimistic view? First, conditions can vary substantially from country to country; it is typical to see some slowdown in payment performance in economies that may be moving into a more recessionary phase. Take, for instance, the attempted coup in Turkey last summer that disrupted the local economy. In addition, the world faces downside risks from several directions, including the impact of Brexit on the UK and EU, a more isolationist and protectionist stance from the US government, and rising geopolitical tensions with North Korea, Iran and Russia, to name just a few. Faced with uncertainly, businesses tend to react with caution.

Cash or Credit?

One indication that Eastern European businesses are operating cautiously is their preference for selling on terms other than credit. In fact, nearly 60 percent of survey respondents prefer payment terms such as cash in advance or letters of credit. Of the countries surveyed, companies in Hungary, Czech Republic, and Turkey are the most open to selling on credit, while Poland had the lowest average percentage of credit sales—just 28.9 percent.

This low level of credit sales is caused by the perceived risk of payment problems. For instance, the rate of overdue B2B notices has increased in Eastern Europe over the past few years, stabilizing between 2016 and 2017 at just over 40 percent. The rate of late payments from domestic companies is especially high–nearly 90 percent–while late payments from foreign customers are only slightly lower at 78.9 percent. Survey respondents in the Czech Republic were most likely to experience late payments–95.1 percent of domestic and 84.8 percent of foreign invoices are paid late.

The late payment of invoices directly impacts the liquidity of businesses relying on these funds, which can lead them to pay their suppliers late as well, having consequences for the entire supply chain.

Where’s My Money?

The good news for companies operating in Eastern Europe is that past due performance appears to be stabilizing after a period of deterioration. After peaking at 45 percent in 2016 after four years of increases, the percentage of overdue B2B invoices decreased this year to 41.5 percent.

Liquidity issues are largely to blame for overdue bills. Forty-six percent of businesses surveyed cited insufficient availability of funds, nearly a third blamed buyers’ intentional use of unpaid invoices as a form of financing, and just under 20 percent pointed to the complexity of the payment procedure.

Let’s take a closer look. More than 75 percent of businesses in Hungary and 63.1 percent in Poland are impacted by domestic customers’ insufficient funds—the highest rates in Eastern Europe. Foreign payment delays driven by liquidity issues were reported most often in Hungary and Slovakia, both at rates hovering around 50 percent. Overall, while Czech businesses experience the least delays because of insufficient availability of funds (41.8 percent domestic, 18.5 percent foreign), they are also the most concerned about their buyers’ use of outstanding invoices as a form of financing (47.7 percent domestic, 34 percent foreign).

What about bills that never get paid? In this area, Eastern Europe is doing great: When it comes to uncollectable receivables, the region has a rate of just one percent, a 0.2 percent improvement from 2016. The industries most impacted by uncollectable receivables are construction, consumer durables and business services sectors. Turkey—the largest Eastern European trading partner for US companies—has a rate of 2.2 percent, about twice the level of other countries surveyed. Contributing to this negative trend are the 2016 attempted coup that caused a crackdown on political opposition and led to a volatile market.

Know Thy Customer

All of this data suggests that there may be some stabilization in the future relative to past payment practices in Eastern Europe. However, a lot of trade in the region is still done on terms that are more secure than credit. Again, this is partly due to the perceived risk of the market. Because the region has a history of relatively high uncollectible receivable amounts, especially in Turkey, and there’s been a pattern of deterioration in payment performance over the last five years, businesses must be diligent in evaluating their Eastern European customers’ and potential customers’ ability to pay.

Because liquidity is such a big stumbling block for companies in Eastern Europe, it’s a smart move for US organizations conducting business in the area to know their customers and scrutinize their payment abilities. After all, getting paid—and on time—is key to running a successful, smoothly operating business. To that end, a trade credit insurer like Atradius can not only provide businesses with up-to-date, nuanced analyses of each geographical area they’re wanting to conduct business in, but also will protect companies that run into invoice woes.

Doug Collins is vice president-regional director, Risk Services-Americas and the International Groups Unit at Atradius, a trade credit insurance company. In this leadership role, Collins is responsible for Atradius’ risk underwriting and claims activities in North America, Central America and the Caribbean.