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EOS Survey ‘European Payment Practices’ 2016

Payment discipline in Europe at previous year's level or slightly worse

Although in 2015 payment practices in Europe had significantly improved over the previous year, a departure from this positive trend is now being observed. 

This was one of the findings of the EOS Survey ‘European Payment Practices’ for which market research institute TNS Infratest polled 3,000 decision-makers in 14 European countries.

In Western Europe, the proportion of invoices paid on time is 80 per cent on average, while in Eastern Europe it is 74 per cent. This means that in both regions, on-time payments are decreasing by an average of 1%. 

German customers continue to be the most reliable payers in Europe: 83 per cent of them pay their bills within the stipulated deadline. 

Despite the lack of any positive news about payment practices this year, the increase in on-time payments from the previous year now appears to be having an impact. Western and Eastern European companies alike are now much less likely to feel that their survival is under threat due to payment defaults. 

Whereas in 2015, 13 per cent of Western European and 15 per cent of Eastern European companies stated that their current level of bad debt was jeopardising their existence, in 2016 only 8 per cent in Western Europe and 12 per cent in Eastern Europe felt affected by such a risk. This development was particularly marked in Austria (minus nine per cent) and Spain (minus seven per cent), where the pecentage of companies worried about their viability was more than halved.

The end of a positive trend?

Extended payment terms in Europe suggest that there will be an increase in late payments in future.

Germany leads the field in Europe for having strict payment terms. Nowhere else do companies give their customers less time to pay their invoices (16 days for B2C and 26 days for B2B). 

Not everywhere have companies been as strict. Compared with the previous year, many companies actually slightly extended their regular payment periods. Within Europe, customers have 36 days on average, i.e. two days longer than in 2015, to pay their invoices. In the UK it is as much as four days longer (2016 35 days), and in Hungary customers enjoy an extra seven-day grace period (2016: 38 days).

Although this seems obliging on the part of companies it could be a double-sided sword. Because a comparison with the survey results from previous years has shown that the shorter the payment terms the better the payment practices. Accordingly, the currently observed extension of payment deadlines could point to a negative trend in the future. 

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