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European Payment Practices
Europeans’ payment practices
In order to conduct the Payment Practices Survey 2009, the EOS Group, in collaboration with the independent market research organization Ipsos, questioned 1200 companies in five European countries. The aim was to gather comprehensive data on payment practices, invoice handling, and risk and receivables management.
Growing scepticism
Despite the heterogeneity of the United Kingdom, Germany, Switzerland, Hungary and Bulgaria in terms of economy, culture and history, they all currently have one thing in common: they are all struggling with the consequences of the global financial crisis. Their assessments of the future are correspondingly pessimistic. Most of the nations in the survey are expecting payment behaviour to deteriorate in the next two years. Private and corporate insolvencies will increase, according to most of the managers questioned. By way of comparison, the majority of the 645 companies that took part in the Payment Practices Survey 2007 were more optimistic: in Poland, Romania and Russia, people were expecting payment behaviour to improve in the future.
To keep business risks low, it is important that companies operating internationally are aware of country-specific payment habits. For example, the average proportion of punctual payments in the different countries surveyed varies widely: from 21% in Hungary to 77% in Germany. On the other hand, late bills are paid quickly in Hungary after an average of 32 days, which is quicker than in Bulgaria (44 days), Switzerland (40 days), Germany (36 days) and the UK (33 days).
Bulgaria: Patience required for direct debiting
Bulgarian and Swiss companies wait the longest until their bills are paid; their average payment period is 33 days. Two-thirds of all Bulgarian businesses do not cooperate with external service providers in the receivables management field.
Switzerland: The Swiss pay punctually
On average, only 60% of Swiss companies check the credit standing of new customers. The lack of credit investigation, however, can become a risk for them. Despite the relatively reliable payment practices of their compatriots – on average, 75% of customers settle their bills in due time – almost half of the companies surveyed expect payment behaviour to deteriorate. This is necessitating the increasing professionalization of risk and receivables management as a matter of urgency.
Germany: High level of payment – pessimistic outlook
At 77% on average, the proportion of punctual payments in Germany was one of the best results in the international survey, especially when the comparatively short payment period of 25 days is borne in mind. However, German companies have to write off 2.1% of their receivables. This is significantly more than British or Swiss companies, which each write off only 1.4% of theirs. Half of German companies estimate that payment behaviour will worsen in the future.
The United Kingdom: Late, but reliable
The average proportion of new customers in British companies’ overall customer bases is 22%. 93% of new customers undergo a credit investigation as standard procedure. Even though only 59% of British people pay their bills on time, actual bad debt losses amount to only 1.4%. One reason for this could be the professional risk and receivables management practised by British companies.
Hungary: Companies don’t have it easy
Hungarian companies have a tough time: on average, only one-fifth of bills are paid on time and companies have to write off 5.3% of their receivables. On the other hand, overdue receivables are paid comparatively quickly after 32 days. One-third of companies have already encountered cash flow problems as a result of delays in payments.
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