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Summary conclusion
The economic crisis continued to impact businesses across Europe in early 2011, as evidenced by the incidence of late payments flagged up by this report. While in six of the nine countries surveyed respondents, on average, received payments earlier than the average due date, the percentage of past due date invoices, depending upon the country involved, stood at anywhere between 20% and 35%. Moreover the proportion of uncollectable foreign receivables reported was as high as 10%.
These are significant percentages that illustrate the challenges involved in international B2B trade and demonstrate how some European buyers are genuinely still struggling to meet their payment responsibilities, even as the global recession has lost some of its sting. An equally telling sign was that over three quarters of survey respondents cited an insufficient availability of funds as the key reason behind their customers’ payment delays. Another worrying reality reported in this survey was a slight increase in overall days sales outstanding (DSO).
Percentage of domestic and foreign invoices paid after the due date
The complete results for a country can be accessed by clicking on the country name.
European avarage
Denmark
Spain
France
Sweden
Belgium FR - NL
Italy
Great Britain
Germany
The Netherlands
In reaction, the respondents across the survey scope have been forced to take actions to ensure their own financial viability is maintained, such as increasing their dunning activities, whilst at the same time pushing to retain and expand their customer base. Commercial imperatives were shown to be the key driver behind a combination of credit management practices employed both in the decision process about offering credit terms and in the credit and receivables management process following the sale. But the credit capacity of buyers was also a major determinant in decision-making. How well these drivers can be balanced going forward will play a role in determining which companies survive and prosper in EU economies still generally characterised by slow growth.
One standout conclusion from the survey is the prevailing difference between the business cultures of Northern and Southern Europe, in terms of the duration of credit and payment periods. Companies in Spain and Italy are noticeably slower than their EU peers in terms of reimbursing their vendors, and mirror this with a proportionally larger volume of trade credit and early payment discounts than their Northern counterparts. Buyers in these two countries also exhibited the longest DSO figures.
Such cultural traits in payment behaviour provide opportunities for businesses to learn from other markets and adapt new procedures that can improve their on-time receipt of payment. This can of course include the use of credit insurance as a form of payment protection fallback, as part of a wider push towards the target of promoting safe trade between all parties involved in the transaction. The hope is that the remainder of 2011 will produce a rising level of solvency among buyers and sellers, but this survey indicates that caution should be a watchword for businesses that sell their products and services on credit.
Basis: companies surveyed in 9 EU countries.
Source: Payment Practices Barometer - Spring 2011
 Download full Payment Practices Barometer group report
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Date: May 2011
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