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European Payment Habits. EOS Four country survey 2007
How Europeans are used to paying
Towards the end of 2007, the EOS Group, in cooperation with the independent market research organization Ipsos, asked a total of 645 companies in four countries about the prevailing payment practices in their respective countries. 200 enterprises in each Greece, Poland and Russia, and 45 in Romania, were asked questions on all aspects of their payment experiences, economic trends in their home country and the general topics of information management, arrears management and receivables management.
Varying growth rates
All four countries are dynamic: Poland, Greece, Russia and Romania are all currently registering growth rates of between 4 and 7%. Significant growth drivers are high levels of investment and private consumption. However, the four economies differ historically, culturally and economically. Some of the national differences in payment practices, as highlighted in the EOS Payment Practices in Europe survey, are also significant. In October 2007 in conjunction with Ipsos, an independent market research institute, the EOS Group asked a total of 645 companies in four European countries about payment practices in their markets. The results of the survey provide pointers for companies active in these countries in terms of credit and receivables management.
For example, payment deadlines differ widely between the four countries studied. While payment deadlines granted by Polish companies are generally 32 days, it is 36 days in Romania, 78 days in Russia and 105 days in Greece. It is against this background that we need to consider the proportion of payments made on time. 68% of outstanding debts are paid on time – but then Greek customers have 3.5 months on average to do so. According to our survey, 67% of all debts in Romania also paid on time. This is a high proportion, particularly when one considers that the average payment deadline in Romania is 36 days.
Greece: Relaxed payment terms
In Greece, the average level of outstanding debts as a proportion of total sales is 25%. More than a quarter of the companies surveyed say that the average receivable per debtor amounts to more than EUR 10,000. Since the Greeks also set long credit terms (105 days on average), liquidity may be lacking in other areas. Few companies expect the situation to improve in the future, while 35% even anticipate a further deterioration in payment practices.
Poland: Sticking to payment deadlines pays off
On average, 9% of Polish invoices are paid on time. At just 10% of sales, however, the level of outstanding debts there is considerably lower than that of companies in Russia, Greece and Romania. Poles allow just 37 days to pass between the expiry of the credit term and receipt of payment. More than two-thirds of Polish companies employ their own credit manager, while 75% cooperate with external service providers.
Romania: Checks on customers
Almost 90% of Romanian companies have their customers’ credit standing checked before deals are concluded. The figure was only higher in Greece (92%). Companies seldom appoint in-house credit management experts or hire external debt collectors.
Russia: Fewer credit checks
Despite a high proportion of new clients, just under half of Russian companies on average check the credit standing of potential clients before transacting business with them. This means that they are at risk of bad debt losses. More than half of all companies in Russia employ credit management experts. On average, less than a fifth make use of outsourcing.
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