European Payment Practices
Payment Morale in Europe Continues to Decline
Payment Delays Become a Challenge for Companies
This is shown by the current EOS study "European Payment Practices," for which 2,200 financial decision-makers from 11 European countries were surveyed.
- Every fourth invoice is paid too late or not at all
- Payment delays and defaults lead to profit losses and delay investments
- Less than half of the companies have a largely digitized dunning process.
- Every second company offers digital payment methods.
- One-third of the companies rely on external service providers in receivables management.
More Invoices are Paid Late
Current EOS Survey on Receivables Management in Europe
The EOS study "European Payment Practices" has been determining a mood picture of the international economy on the subject of receivables management since 2007. Among other things, the current study comes to the conclusion that many European customers are not so serious about payment deadlines. For companies, this often means less liquidity and higher costs. So far, only a small proportion of them have drawn the consequences and are consistently pushing ahead with the digitization of their dunning process.
What are the reasons for the poor payment morale in business transactions? What are the consequences for companies? And what expectations do they have for the future? You can find answers to these questions and other results of our survey in this short video.
Poor Payment Habits Endanger Financial Stability
Complete Digitization of Dunning Remains a Future Topic
More and more companies have to wait for their invoices to be paid or write off their receivables as uncollectible. Every fourth invoice is paid late or not at all. If a company cannot collect its receivables, a domino effect often occurs. Many companies are already familiar with this: They suspect payment difficulties with their own customers as the most important reason for payment delays or defaults among business customers. In second place is the exploitation of supplier credits - probably to protect their own liquidity. However, non-digitized processing processes also cause delays in the punctual payment of receivables, according to the companies.
For companies, the poor payment morale of their customers has noticeable consequences: financial decision-makers report declines in profits, higher interest costs, liquidity bottlenecks and postponed investments. Every fifth company even sees its existence threatened. In order to counteract this, companies are focusing on shorter payment terms. However, most are still hesitant to introduce digital payment methods and completely digitize receivables management. Not even 47 percent of European companies have largely digitized their processes in dunning.
Our current study shows that payment morale in Europe is a challenge that we must not underestimate. Companies should prepare themselves, because this development places high demands on liquidity management.
Marwin Ramcke
CEO EOS Group
How Can the Payment Morale of Late Payers be Improved?
Professional Receivables Management Becomes a Success Factor
The weak economy gives little hope that payment behavior will improve in the next two years. Due to the globally confusing situation, it is becoming increasingly complex for creditors to enforce their claims. Without a professionally organized receivables management system, the risks of liquidity bottlenecks, profit losses and even insolvency increase.
In order to be able to demand outstanding payments faster and more consistently, companies would like politicians to simplify legal steps and reduce bureaucracy. The increasing digitization of receivables management could also have a positive effect on payment morale in business transactions, enabling companies to react faster and more effectively to payment delays.
All study results at a glance can be found in our whitepaper
Download the EOS study "European Payment Practices" for free
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