Payment Periods in Europe - Euler Hermes

no. 1182
Special ”Dossier”
Payment periods in Europe:
wide gaps
Euler Hermes Economic Research Department
Economic Outlook
www.eulerhermes.com | no. 1182

Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
Contents
n°1182
Special Dossier
Payment periods
Payment periods in Europe: wide gaps
Economic Outlook n° 1182 | Special Dossier | Payment periods
Editorial
page 3
page 4
> Overview – The increase in payment periods poses a major risk to European recovery page 4
page 8
> First Focus point – A three-speed Europe page 8
page 12
> Second Focus point – What determines payment periods in different sectors? page 12
• Automobiles and automotive components >The problem for subcontractors page 14
• Air transport >An instrument of globalisation but marked by regional differences page 18
• Chemicals >Supplying industries and supporting the industrial fabric via client credit page 20
• Pharmaceuticals >No cash flow problems page 22
• IT services > Constrained by their clientele page 24
• Aeronautic components >Stability in payment periods – sign of a healthy sector page 25
• Construction >The sector with the greatest disparities page 26
• Four determinants to note page 28
• Comparison Germany-France page 28
Annexes
page 29
• Annex I > Law on the Modernisation of the Economy (LME) and sector round tables in France page 29
• Annex II > Payment defaults in Italy page 30
• Annex III > Detailed data, by country page 31
• Annex IV > Detailed data, by sector page 32
Subsidiaries
page 33
Economic Outlook
series
page 35
Le Bulletin Économique du Groupe Euler Hermes is issued ten times a year by the Economic research department of Euler Hermes. It is also available on subscription for
other businesses and organisations. Reproduction is authorised, so long as mention of source is made. o Publication Director and Chief Economist: Ludovic Subran
• Study coordinated by: Virginie Reboul (Economist) • Macroeconomic Research: Maxime Lemerle (Manager), Mahamoud Islam (Economist) • Global Sector Research:
Yann Lacroix (Manager), Bruno Goutard, Marc Livinec, Didier Moizo (Sector Economists) • Country risk Research: David Atkinson (Manager), Andrew Atkinson, Manfred
Stamer (Economists) • Have also contributed to this publication: Romeo Grill (Economist for Germany), Dan North (Economist for the USA), Christian Péchard (Infocenter
Studies Manager), Andrea Pignagnoli (Economist) • Graphic Design: Claire Mabille • Editors: Martine Benhadj • Support: Anne-Marie Bégoc, Valérie Poulain • Translation:
Charles Prager • For further information, contact: the Economic Research Department of Euler Hermes at 1, place des Saisons 92 048 Paris La Défense Cedex – Tel.: +33
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Evreux, France – Permit April 2012—Bull 1176; ISSN 1 162 – 2 881 o 31 May 2012
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Economic Outlook N° 1182 | Special Dossier | Payment periods
Euler Hermes
Editorial
The harmonisation of payment periods in Europe: a
necessary evil?
Although the notion of economic convergence seems crucial to the future of the
European Monetary Union, it is threatened by the upheavals being undergone.
The growing gaps in growth, public deficits and current account balances – both in
scale and intensity – demonstrate that the differences between the heart of the
Eurozone and the periphery are here to stay. Creating a common economic policy
that benefits from this heterogeneity and that ultimately transcends it is an essential
task, especially to allay fears over the Eurozone’s very future. The toolbox – of which
the European Financial Stability Facility (EFSF), the European Stability Mechanism
(ESM) and the European Investment Bank (EIB) are parts – strengthens institutional
convergence, but it does not solve the problem of the efficient specialisation of
economies that one would expect. The economic debate, for its part, remains marked
by this indispensable convergence, crystallized by the furious speed required to
return to balanced budgets for 2012 and 2013. Making this adjustment is particularly
hard for the countries of Southern Europe, hit by severe recessions. This study focuses
on a less visible but equally important convergence: that of payment periods between
businesses. By March 2013, under a European Directive, contractual payment periods
in Europe must be set at a maximum of 60 days. Some countries are ready for this,
such as France, while others, such as Germany, already show payment periods well
below 60 days. By contrast, Italy, Spain and Portugal, as well as certain key economic
sectors in some countries, such as construction and IT services, are far from the
European target. On top of this is the deterioration in economic activity in Europe. This
should further amplify these gaps by 2013. Will European SMEs, which create the
growth of the Eurozone, suffer from an overly rapid convergence, one that is
countercyclical and potentially damaging to their cash flows? When you focus in on
the sector level, the differences between client and supplier payment periods are
considerable and at times alarming. In economic policy terms, efforts to support and
increase the competitiveness of the private sector remain little discussed, despite a
marked rise in business insolvencies nearly everywhere in Europe. Discussions over
sovereign debt occupy a great deal of attention, but they do not address the
difficulties facing businesses. However, it is today that we will determine the health of
Europe’s industrial fabric for the future. _Ludovic Subran
3

Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
Overview
The increase in payment periods
poses a major risk
to European recovery
As we near the March 2013 implementation of
the European Directive, B2B payment periods
are now more than ever a core concern. Cash
flow dynamics are always crucial for a business, and
this becomes especially the case at times of economic
crisis and more restricted access to bank or market
finance, during which even more rigorous management
of accounts receivable and payable is called for.
1
Definitions
▶ Contractual payment period > the time period during
which payment should be made according to the provisions
agreed between the client and the supplier (stated in days).
▶ Effective payment period > the time period at the end of
which the payments due as agreed between the client and
the supplier are actually made (stated in days).
▶ Lateness of payment > the time difference between the
contractual payment period and effective payment period.
The sum of the average lateness of payment and the
contractual time yields the effective payment period (stated
in days).
▶ Days’revenue (DR) > unit consensually used to express
payment periods when they are calculated using business
balance sheet data, dividing the amount of client credits or
supplier debts by average daily revenue.
▶ Client payment period > the average time until collection
by the business of client payments, taking account of the
payment periods agreed by the business. The longer the
delay, the more the business’s cash flows suffer from a lack of
funds.
▶ Supplier payment period > the average time taken by a
business to pay suppliers, taking into account the time
periods agreed with the business. The shorter the payment
period, the more the business’s cash flow suffers from a lack
of funds due to rapid payment.
▶ Tension indicator >the difference between client
payment periods and supplier payment periods (stated in
days).
Source: Euler Hermes
4

Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
The importance of payment periods
A microeconomic problem…
… and an indicator of the business climate
Order
Issuing
of invoice
60 days maximum
Period defined by the European Directive
Date Invoice d’échéance
de due la facture date
> An aggregate calculated for a country or sector that:
– gauges the fluidity of exchanges between
a country’s businesses,
– is a measure of cash flow management vitality,
– has an impact on business climate attractiveness.
Delivery
Source: Euler Hermes
Besides a sharp upturn in the volume of insolvencies,
the end-stage of business difficulties, the crisis and its
many secondary effects have brought a marked deterioration
in the quality of B2B payments in Europe.
There have been overall increases in the rate of losses
arising from bad debts, in late payments, and more
broadly in payment periods, while B2B credit is a major
mode of finance across all countries. The current economic
and financial climate, marked by a deteriorating
outlook and by increased uncertainty and greater volatility,
strengthens the need that much more to monitor
and manage the risks associated with the lengthening
of these payment periods.
Many data sources exist for measuring and comparing
payment periods, as well as several studies to analyze
developments in inter-company payment. However,
their methodologies vary in terms of the nature of the
data they employ – either using quantitative data
(from national administrative databases, institutes or
surveys), and most often on only an annual basis, or
infra-annually, or – most often – using qualitative data
resulting from samples or surveys. The methodologies
also vary in terms of the scope of their studies, either
in terms of business size (SMEs or large companies) or
time-scope under study (payment periods or only late
payments). As a result, the comparative, studies examine
fields of varying scope, with no effective harmonising
methodology. Also, these analyses are
mostly descriptive, covering sectoral matters, and
generally do not offer any quantitative forecast. Lastly,
we should note that, by its nature, it remains hard to
summarise the payment period situation for a country
or even a sector, given the wide amplitude of payment
periods from one business to another.
◾◾◾
2
Legal aspects
To put an end to the problem of late
payments, countries are mobilising.
European Union > European Directive 2011/7 of 16 February
will replace European Directive 2000/35 of 29 June. Member
States must make the changeover by 16 March at the latest. The
main measures of the Directive are:
> establishing a standard payment period of 30 days;
> setting a maximum payment period of 60 days in the absence
of any contractual stipulation setting another payment period
> introduction of penalties in the event of late payment, with
a unit indemnity of 40 euros interest charged on late payment
(reference rates plus 8%).
France > The French Law on the Modernisation of the Economy
(LME), France ▶ The French Law on the Modernisation
of the Economy (LME), introduced in 2009, imposes a maximum
payment period of 60 days, 45 days from the end of the
month beginning from date of issue of the invoice. 35 derogations
(sector agreements) have allowed businesses that otherwise
would have run into severe difficulties to benefit from more
flexible, gradual conditions. On 29 February, France's National
Assembly adopted the proposed bill concerning the simplification
of legislation, which, in particular, provides for the extension of
dispensatory payment periods.
Spain > Spain’s law 15/2010 of July 2010 established a timetable
of gradual application of these new payment periods:
> from its entry into force until 31 December, payment periods
were limited to 85 days
> from 1 January 2012 to 31 December, a maximum payment
period of 75 days
> from 1 January, payment periods limited to 60 days
Sources: Ministries of Economy, Finance and Foreign Trade, Official Journal
of the European Union
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Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
◾◾◾
From the literature on the subject and from past
experience, notably during the crisis of winter 2008-
2009 and the emergence from crisis that followed,
three key facts on payment periods in Europe can be
noted:
▶ An economic recovery does not
necessarily imply a shortening in payment
periods.
The crisis has generally necessitated tighter control
over cash flows, with reductions in investment and
optimisation of inventories. However, these have not
been enough to offset the exceptional scale of the
downturn, which has brought increased payment
periods in every country in our study, apart from one
notable exception – France, partly because of legal
changes over this period. At the same time, the rise
in late payments and payment defaults has also
increased perceptions of a lower likelihood of being
paid on time. Conversely, recovery in the economy
does not automatically signify a trend of reduced
payment periods. In the very short term, the recovery
phase of activity can initially be accompanied by an
increase in exposure (accounts receivable and payable)
at a faster pace than turnover, which counters
the shortening in payment periods, and it then
requires the growth in activity to accelerate more
than proportionally: France saw no reduction in payment
periods in 2010, on annual average. Growth of
0.1%, in our study, implies a change in client payment
periods of between -1.3% and +0.5%.
▶ A rise in late payments increases
insolvencies more than proportionally,
but the obverse is generally not shown.
In 2011, in countries such as Germany and France,
the downtrend in late payment periods was accompanied
at the same time by a fall in insolvencies.
However in Belgium and even more in The United
Kingdom, this same trend failed to prevent a rise in
insolvencies. In practice, a relationship between late
payment periods and insolvencies is seen much
more during periods of increasing late payment
periods, which are propitious to a sharp rise in insolvencies.
▶ A favourable legal framework brings
increased attractiveness.
The European Directive will prove an effort for some
countries, for instance in Southern Europe, which
must gradually come into line with the new standards.
However, the convergence should in the long
run also allow them to generally reduce their payment
risk profiles (all other things being equal), and,
in so doing, increase their attractiveness as international
trading partners. France regulates payment
periods through its Law on the Modernisation of the
Economy (LME), introduced in 2009 (see ‘Legal
aspects’p. 5). The French government would like to
further reduce payment periods to 30 days for SMEs
and VSEs. Clearly anticipating the coming European
Directive, Spain’s law of July 2010 (see ‘Legal
aspects’p. 5) sets out a timetable for the gradual
application of these payment periods.
Focus on France
The legal framework and the effect of the LME
6%
4%
2%
0
-2%
-4%
Introduction
of the LME
-6%
98 00 02 04 06 08 10 12
Growth (left axis)
Client payment periods (left axis)
Inverse growth in insolvencies (right axis)
-20%
-15%
-10%
-5%
0
-5%
-10%
-15%
-20%
▶ The case of France
It is notably thanks to the LME and the
anticipation of its coming into force that
French businesses improved payment
periods and their volatility, an important
point to the extent that they use four
times as much inter-business credit
than bank credit (at around 400 billion
and 100 billion euros respectively), with
accounts payable accounting for
between 25% and 30% of the total
balance sheet of French businesses.
In 2009 payment periods fell by 3% and
insolvencies rose by 12% (against +15%
in 2008).
6
Source: Euler Hermes

Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
The aim of this study is to provide a comparative
analysis between countries (our first focus point)
and between sectors (second focus point) for client
and for supplier payment periods in Europe. The
major findings of our study are summarised below:
1The slowing of efforts seen starting in
2009 confirms the existence of three
dynamics in at work in Europe.
In this initial analysis, using the BACH database (a
European database on non-financial firms issued by
the Bank of France), we studied the course of payment
periods for several European countries over the period
2000-2010 (available balance sheets). We next offer
a prospective view of payment periods for 2012-2013
using Euler Hermes data, which will highlight the
magnitude of the efforts that need to be made. The
indicators of change and of cash flow tensions generated
put the accent on the changes and the trends
in payment behaviour more than on the length of payment
periods, and best reflect the risks of worsening
cash flows that are already under pressure.
> There is a clear disparity between the countries of
Northern and Southern Europe that risks widening
over the very short term (2012), in the current economic
environment, and this will mean greater
efforts to be made, especially for countries in
Southern Europe.
The gaps by country. We can distinguish in fact ‘three
Europes’: Germany and Poland, both of whom show
payment periods shorter than the 60 days set out in
the European Directive and displaying very low cash
flow tension indicators; Belgium and France with payment
periods close to 60 days; and Spain, Italy and
Portugal, all of which saw significant increases in payment
periods in 2009 and will have to make considerable
efforts to meet the 60-day standard.
> The outlook for 2012 is for an accentuation of the
gaps between countries and therefore of the efforts
to be made.
In 2012, payment periods should mirror economic
developments. With an outlook for positive growth,
payment periods for businesses in Poland and
Germany should normally shorten by an average of 2%
and 0.5% respectively. For France and Belgium, with
growth forecast to be below potential, payment
periods will increase by 0.5%. By contrast, the countries
most in difficulty, such as Spain, Italy and Portugal,
should see an increase in payment periods, taking
them further away from the 60-day target before
16 March.
> In 2013, a general, but limited, improvement in
payment periods in Europe.
The outlook for positive growth in 2013 will allow an
automatic improvement in payment period practices,
but this will not be enough to meet the target.
2 European sectors: 4 groups.
In a second analysis, we employ the Euler Hermes
database for a closer examination of European business
sectors, over a greater number of countries. We
focus on eight key sectors.
> Gaps between sectors will persist, driven by the
difficult economic situation and by still unequal
negotiating strengths.
There is a clear gap between sectors within a given
country and between countries in a given sector. The
ranking of sectors (by length of payment periods)
remain fairly similar from country to country. However,
in Southern Europe, the sectoral differences are four to
five times greater than in Northern Europe. Our eight
sectors break down into four groups: (1) air transport
and automobiles, with concentrated suppliers and
clients who pay quickly; (2) pharmaceuticals, chemicals
and automotive components, with average payment
periods since they are widely present in the economy,
and aeronautic component suppliers; (3) IT
services, where unequal bargaining power is the rule;
and (4) construction, with domestically-based suppliers
and clients. ▣
▶ Areas of analysis
> For the first analysis:
Countries: Germany, Belgium, Spain, France,
Poland, Italy and Portugal
All sizes of businesses
Period: 2000-2010
> For the second analysis:
Countries: Germany, Belgium, Spain, France,
Italy, United Kingdom, United States, Denmark,
Norway, and Sweden.
All sizes of businesses
Period: 2006-2010
Business sectors
Sector Division NACE Code 1
Automobiles 34 34.1 to 34.3
Automotive components - 28.4
Chemicals - 4.1, 24.2, 24.3, 24.5, 24.6, 24.7
Pharmaceuticals - 24.4
Air transport 62 62.1 and 62.2
Aeronautic components - 35.3
Construction - 45.2 and 45.4
IT services 72 72.1 to 72.6
7

Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
First
Focus point
A three-speed Europe
Diverging developments in
the face of the economic climate
and the European Directive
This analysis highlights clear differences in
payment behaviour that comes as no revelation,
given the warning sounded in June 2000 with the
initial publication by the European Commission of
its Directive to combat late B2B payments.
However, with the targets not being met, on
16 February the Commission proposed a new
European Directive to allow long-term genuine
harmonisation within the EU. By 16 March 2013
this Directive has to be enter into law in all Member
States. Our following account of 2000-2010 and
our forecasts thus do not capture the legislative
impact in Spain (July 2010) and in the European
Union (March 2013).
Looking forward on the basis of macroeconomic
forecasts suggests only a weak convergence by
2013 (the target date of the European Directive
being 16 March), after an intervening increase in
payment period gaps in 2012 due primarily to the
weakness in the economy.
▶ Sectoral gaps 4 to 5 times bigger in
Southern Europe than in Northern
Europe.
> Italy and Spain show large disparities
between sectors: with a national average
of 79 days for client payment periods,
Spain has payment periods ranging
between 174 days in the construction
sector to only 48 days in the automotive
sector, a difference of 126 days.
> German businesses posted average
client payment periods of 24 days in 2010,
with small variation (31 days), depending
on the sector.
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Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
At the end of 2010, on the eve of the
European Directive coming into force,
payment periods in different countries
were highly disparate, both in duration
and in trend, and particularly worse in
countries in Southern Europe.
▶ Germany and Poland already largely within the
standards
We see Germany and Poland already well below the
60-day standard set by the European Directive. The
two countries are distinguished by their strict
enforcement of late payment penalties. They show a
negative change indicator, reflecting a steady
improvement in payment behaviour. At 24
days’revenue on average in 2010, client payment
periods for German businesses fell by 21% between
2000 and 2010. Poland showed average payment
periods of 45 days’revenue in 2010, the same as in
2005.
▶ France and Belgium in the middle
Belgium and France neared the 60-day standard over
the decade. After falling by 10% since 2000, the time,
client payment periods in France stood at 61 days in
2010. This was largely due to anticipation of the 60-
day maximum LME standard and its implementation.
The relatively high level of Belgium’s cash flow tension
indicator means that businesses there must pay
special attention to cash flow management.
We can see that the indicators of change in payment
terms in France were the only improvements in 2009.
Initially fairly close to that in Southern Europe, French
payment behaviour has approached that of Northern
Europe, thanks notably to the implementation of the
LME and also that to the importance of its trade with
Germany, where payment periods are short.
The levels of payment periods in France and Belgium
enable them to anticipate the implementation of the
European Directive with a certain vigilant calm.
▶ Southern Europe at the back
With longer contractual payment periods, Spain
introduced its 10 July 2010 law to gradually reduce
payment periods to conform to the European
Directive by 1 January. However, like Portugal and
Italy, countries in Southern Europe are suffering in
the economic climate and display payment periods
well above the norm, rising to between 80 and 100
days since 2009. At 116 days’turnover, payment
periods in Italy are the longest of these.
◾◾◾
Amplitude*
150
The average payment period masks major differences between countries
120
90
IT
ES
60
30
GB
FR
BE
SE DE NO
DK
Source: Euler Hermes
0
20 50 80 110
Length of payment periods
* The difference between the sector posting the longest payment periods in the country and the sector with the shortest payment periods in the country.
Panel of sectors: automobiles, automotive components, pharmaceuticals, chemicals, air transport, aeronautic components, construction and IT services.
9

Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
An outlook of lengthening payment periods…
… driven by a worsened economic environment
+ 0.5 %
- 1.5 %
- 0.5 %
- 1 %
- 2 %
- 2.5 %
+ 0.5 %
+ 1 %
+ 0 %
+ 1.5 %
+ 2.5 %
+ 0.5 %
+ 2 %
0 %
Value 1: Change in payment periods from 2011 to 2012
Value 2: Change in payment periods from 2012 to 2013
Source: Euler Hermes
◾◾◾
Looking forward: widening disparities,
major efforts to be made, too rapid and
perhaps inopportune?
Using the econometric relationship between
changes in payment periods and the economic
environment, we expect a lengthening of payment
periods. This is without taking into account the
potential positive effect of anticipations of the
Directive coming into force.
In the countries of Northern Europe, relations between
businesses and banks allow banks to commit
providing borrowers with the funds to pay suppliers
within contractual deadlines. In France and
Southern Europe, by contrast, a system of supplier
credit applies, which makes meeting contractual
deadlines more difficult.
payment periods will continue to improve, dropping
by 0.5% in the former. In Poland, they should shorten
by 2%, in negative correlation with its 3% growth
rate.
▶ Positive momentum in France (due to the LME);
but in Belgium, by contrast, economic setbacks will
be more determining.
With growth forecast at 0.3% in France and 0.2% in
Belgium – in both cases below their growth potential
– the two countries will see a slight 0.5% increase
in payment periods. In 2013, while B2B payment
periods are likely to continue rising by a further 1% in
France, these times should shorten by 1.5% in Belgium
We may expect slightly less rigorous payment discipline
and a certain degree of confidence among
French businesses, possibly due to their use of credit
insurance.
▶ Germany and Poland: small-scale reduction and
nearly no contribution to the economic environment.
Both countries have been rigorous, with payment
periods – already shorter than required under the
European Directive – and they are continuing their
efforts.
In 2012, both countries by our forecasts will enjoy
growth – at 1% in Germany and 3% in Poland – and
▶ Southern European countries, hit hard by the crisis,
will struggle to attain the targets.
Payment periods in Spain, Portugal and Italy should
increase in 2012. We forecast a natural growth in
payment periods in these countries, with a 2.5%
increase in Spain and a 2% increase in Italy, doing
nothing to help them meet the European Directive.
10

Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Cash flow pressures should increase.
From 2007 to 2008, we have seen an evident intensification
of cash flow tensions in Portugal and Italy,
already at high levels.
Increased cash flow tensions force businesses to find
other sources of finance. By contrast, in Poland a
nearly zero cash flow requirement (1 day) underlines
tight cash flow management. Spain, for its part, has
escaped the cash flow scissors effect suffered in
other Southern European countries only thanks to
supplier payment periods being nearly as long as
client payment periods.
Despite showing acceptable cash flow requirements,
businesses in France and Belgium should pay close
attention to cash flow management.
In 2013, the prospects for growth are better than in
2012 and suggest a positive influence on B2B payment
periods. However, this should be of limited
scale in Southern European countries, necessitating
major efforts there to meet the targets of the
European Directive.
The new European Directive should prove difficult
to implement by 2013, especially in
Southern European countries, and could in the
short term impact on the number of insolvencies
and weaken the industrial fabric, although in the
long term it could have a beneficial effect for
these same countries. ▣
Cash flow: Tension Indicator
30
25
20
Forecasts
15
Forecast
of economic growth and insolvencies in 2013
10
Belgium
Germany
Spain
Country Growth Insolvencies
Germany Q +1% q -1%
Poland Q +3% Q + 11%
Belgium Q + 0.2% Q + 10%
France Q +0.3% Q +4%
Spain q - 1.8% Q + 20%
Italy q - 1.8% Q + 24%
Portugal q -3% Q + 29%
5
0
00 01 02 03 04 05 06 07 08 09
Sources: Euler Hermes calculations, BACH database
10
11
12
13
France
Italy
Poland
Portugal
Source: Euler Hermes
Scale of the efforts to be made
Change in client payment periods
Change in supplier payment periods
Days’ revenue
120
Forecast
Days’ revenue
120
Forecast
100
Effort to be made
100
80
80
Effort to be made
60
60
40
20
Belgium
Germany
Spain
France
Italy
Poland
Portugal
40
20
Belgium
Germany
Spain
France
Italy
Poland
Portugal
0
00 01 02 03 04 05 06 07 08 09 10
Sources: Euler Hermes calculations, BACH database
11
12
13
EU Directive
0
00 01 02 03 04 05 06 07 08 09 10
Sources: Euler Hermes calculations, BACH database
11
12
13
EU Directive
11

Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
Second
Focus point
Amplitude**
150
120
90
60
30
Source: Euler Hermes
12
What determines
payment periods
in the different sectors?
A fairly marked axis of sector internationalisation
Group 1
Air transport
Automobiles
Pharmaceuticals
Aeronautic
components
Group 2
**
Automotive
components
Chemicals
Construction
IT services
0
10 40 80 100
Length of payment periods
Group 4
Group 3
* The difference between the country posting the longest payment periods for the sector and the country with the shortest
payment periods for the sector.
Panel of countries: Germany, Belgium, Spain, France, Italy, United Kingdom, Sweden, Denmark and Norway
** Excluding Spain
The national data studied in the first part of this
study does reflect the overall trends in a country,
but not the differences in the particular situations
related, for example, to business size or business
sector.
▶ Unequal bargaining power is a well-know fact
of life for SMEs dealing with very large enterprises,
and it is a structural disadvantage for them.
Major enterprises use their bargaining power,
weakening SMES, in order to win shorter client
payment periods and longer supplier payment
periods. This becomes more acute during periods
of crisis, during which room for manoeuvre
(access to finance) is more greatly reduced for the
smallest firms.
▶ The sector of activity effect is by contrast less
well known, but the disparities are great and are
intrinsically linked to the very nature of the activity
of businesses in the sector, due either to the sales
cycle (e.g., toys and chocolate), the production
cycle (longer in public works, shorter in foods),
or to the sector’s positioning (the absence of client
payment periods in major retail distributors).
This second part of our study will highlight other
sectors that also show these disparities.

Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
The longest payment periods are seen in nearly
all countries in the construction and IT services
sectors. The automotive sector in most countries
has the least need of B2B credit. In Spain and France,
there is a difference of around 60 days between the
automotive sector and IT services, while the difference
is 65 days in Italy, only 30 days in Germany, and 20 days
in the United Kingdom. Over the period we examine,
we see a general convergence between payment
periods, limiting cash flow requirements.
We can distinguish four groups of sectors that present
payment periods that are similar in level and
amplitude.
Group 1
▶ Among automakers, we see a relative convergence
between client payment periods and supplier
payment periods, generating some cash flow surpluses,
with the prize going to Italy, which is converging
towards the other countries studied with client
payment periods at 37 days, but which shows record
supplier payment periods at 75 days.
▶ In air transport, payment periods are overall well
respected. While these have been cut by 18% in Italy,
they have however exploded in Spain, lengthening by
52%. For the other countries, payment periods generally
are between 20 and 40 days.
Group 2
▶ In France, sector round tables have helped subcontractors
to even out client and supplier payment
periods. These have shortened by 21%, to 54 days for
client payment periods and 53 days for supplier payment
periods. In the United Kingdom, however, while
supplier payment periods are down by 30% to 41 days,
client payment periods have dropped by only 12% to
68 days, generating a heavy cash flow requirement of
26 days. Germany continues to show rapid payments,
with client payment periods of 36 days and supplier
payment periods of 24 days. Italy for its part has the slowest
payments, with 111 days for client payment
periods and 96 days for supplier payments. Roughly
speaking, payment periods in Italy are twice as long
as in France and three times as long as in Germany!
▶ With global suppliers, the chemicals and pharmaceuticals
sectors show a limited difference in payment
periods. The chemicals sector made great
efforts after the abrupt slump in activity of 2008-2009,
achieving average client payment periods of 65 days
in 2010. Particularly great efforts were made in Spain,
where businesses have cut payment periods by 30%
since 2006. Our study of the sector also shows big differences:
Italy and Spain allow long client payment
periods, at 93 days and 67 days respectively, while they
pay their suppliers at 63 days and 46 days respectively,
creating significant cash flow requirements.
This becomes even worse in the pharmaceutical sector,
in both cases with cash flow requirements at 50 days.
Large cash flow needs are also generated in Germany,
with client payment periods of 46 days, which seem
long given that supplier payment periods are 29 days. In
the other countries in our study, we see a relative
convergence of client and supplier payment periods
within reasonable limits from 30 days to less than 60
days.
▶ In the aeronautics components sector, payment
periods are generally steady at between 20 and 60
days, with the notable exception of Spain where they
are unusually long.
Group 3
▶ In IT services, key clients impose longer payment
periods on suppliers in the sector, which shows fairly
long payment periods generally, particularly in client
payment periods, which are nearly 50 days in Germany
and the United Kingdom, 95 days in France, 101 days in
Italy and 107 days in Spain. The long client payment
periods and the far shorter supplier payment periods
(generally between 20 and 60 days), which are falling
apart from in France (+3% to 51 days) and in Spain
(+14% to 61 days) generates significant cash flow needs
within the sector and creates genuine financial fragility.
Group 4
▶ The highly locally based construction sector sees
payment periods lengthen when the economic climate
worsens, making it the sector where we see the
biggest differences. A prime example is Spain, where
supplier payment periods have reacted a record 157
days (and where the sector has massively suffered). By
contrast, in the United Kingdom client payment periods
are 33 days. It must be noted that the convergence
toward similar payments in these countries will take a
great deal of time. ▣
13

Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
Automobiles and
automotive components:
the problem for subcontractors
14
Relations between subcontractors and their clients
have been difficult for a long time. Major
contractors enjoy unchallenged bargaining
strength, benefiting from their powerful positions
to the detriment of their subcontractors and
imposing very long payment periods.
We note that the automotive components sector in
France (number two in Europe, behind Germany)
accounts for more than 40% of subcontracting in
the country.
Acceptable payment periods in the
automotive sector.
This is the sector with the shortest client payment
periods (at 37 days on average), proof of the cooperation
between major contractors and subcontractors,
notably in Northern Europe. With the implementation
of industry round tables in France, the
sector is working to harmonise payment periods in
order to avoid harming subcontractors. A very good
example is automotive components, with supplier
payment periods of 53 days.
With supplier payment periods longer than client
payment periods, the automotive sector shows cash
flow surpluses of varying sizes, depending on the
country. However the countries where these surpluses
are the biggest are those where supplier payment
periods are much longer than average.
We can distinguish two different groups of countries
in the auto sector.
▶ The good students of Northern Europe.
At the top of the class are Germany and the United
Kingdom, with client payment periods of 22 and 31
days’revenue respectively, and supplier payment
periods of 34 days in both cases. The cash flow surpluses
in 2010 were the equivalent of 13 days’revenue
in Germany and 3 days’revenue in The United
Kingdom.
In France there was a sharp fall in payment periods in
2007, followed by very sharp fall in 2008, when client
payment periods dropped to 32 days and supplier
payment periods fell to 41 days, in anticipation of the
implementation of LME.
However, 2009 saw a clear lengthening in payment
periods, with client payment periods increasing by
50%. This was a response to the crisis by automakers
to support their concessionaires, the latter heavily
burdened with stocks of unsold vehicles.
In 2010, payment periods shortened again, dropping
to 41 days for client payment periods and 49 days for
supplier payment periods, thanks to good cash flow
management, showing an 8-day surplus.
▶ The countries in Southern Europe as well as
Belgium are drawing on supplier credit.
The countries in Southern Europe as well as Belgium
are drawing on supplier credit to ensure a positive
cash flow to offset their weak cash flows or low shareholders’equity.
Italy shows a significant cash flow surplus, generated
by very long supplier payment periods (at 75 days,
more than twice as long as in Germany). At the same
time, client payment periods there are 37 days, within
the European average, generating a very large positive
cash flow for Italian automakers.
The European Directive, whose aim is to reduce and
control payment periods (to a maximum of 60 days)
will therefore be hard to implement in Italy in this
sector.
◾◾◾

Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Client payment periods: automobiles
60
Client payment periods in days’ revenue, 2010
50
40
30
20
10
US
42
SE
19
ES
48
NO
45 IT
37 BEL
41
FR
41
DK
40
DE
21
GB
31
0
-110% -60% -10% 0% 10%
40% 60%
Change
Supplier payment periods: automobiles
Supplier payment periods in days’ revenue, 2010
100
90
80
70
60
50
40
30
20
US
79 IT
75
FR
50
10
Change
0
-100% -50% 0% 50% 100%
Source: Euler Hermes
Indicator of change in client payment periods: automobiles
NO
47
ES
56
SE
37
BE
69
GB
34
DK
45
DE
34
Cash flow Tension Indicator: automobiles
50
20
40
10
30
20
0
10
-10
0
-20
-10
-20
-30
-40
2007
2008
2009
2010
France
Germany
Spain
Italy
United Kingdom
Belgium
-30
-40
-50
2006
2007
2008
2009
2010
France
Germany
Spain
Italy
United Kingdom
Belgium
Source: Euler Hermes
Source: Euler Hermes
Client and supplier payment period gap: automobiles
Italy
0
22
Belgium
4
16
Spain
3
11
France
-3
5
United Kingdom
Germany
-19
-19
-15
-5
-25 20 -15 -10 -5 0 5 10 15 20 25
Client payment period difference from average of 37 days
Supplier payment period difference from average of 53 days
Source: Euler Hermes
15

Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
◾◾◾
Automotive component makers
and SMEs in the face of the large
automakers: what negotiating
power do subcontractors have?
▶ The scissors effect between client payment
periods and supplier payment periods, with subcontractors
coming out the losers, is a direct result of the
power of automakers over their subcontractor suppliers.
In France, given the many problems encountered by
subcontractors, measures were adopted through a
code of good practice of client/supplier relations for
subcontracting in the auto sector (see Annex I).
in a significant increase in working capital requirements.
▶ In Italy, the cash flow requirements are 14 days,
with the longest client payment periods in Europe
(110 days, twice as long as in France and three times
longer than in Germany), offsetting once again very
long supplier payment periods, at 96 days’revenue.
Italy has not implemented a code of good practice
that could, as in France, considerably improve relations
between major contractors and subcontractors.
We note in the case of Italy an evident financial fragility
when it comes to implementing the new
European Directive on payment periods.
With its highly structured business sectors, Germany
has no need to implement codes of good practice.
▶ For the auto components industry in France, there
has been a clear improvement in payment periods.
Indeed, client payment periods in the industry had
been rising consistently after 2000, to 110 days in
2004 (source: Euler Hermes).
The application of the code of good practice, combined
with the introduction of the LME, obliged automakers
to move to payment periods compatible with
supplier payment periods. We thus saw a proportional
contraction in payment periods in 2010, to 54
days for client payment periods and to 53 days for
supplier payment periods, helping subcontractors to
maintain low cash flow requirements.
In Germany, while payment periods are the shortest,
the cash flow requirements are however higher than
in France.
▶ In Spain and in the United Kingdom, there is a scissors
effect between client payment periods (83 days
and 68 days respectively) and supplier payment
periods (52 days and 41 days respectively), resulting
▶ Cyclical factors: for major contractors, purchasing
operations should, with recovery, bring value added,
as subcontractors should produce equivalent or
more innovative quality at a lower cost; extreme
concentration among suppliers makes negotiations
difficult or even simply unlikely to bear fruit.
▶ Structural factors: with client payment periods
down by half in 2010 to 54 days’revenue, the auto
components industry in France has been one of the
major beneficiaries of the June 2006 signature of the
code of good practice.
In order to adapt to the new European Directive
coming into force in March 2013, Italy will have to
make the greatest efforts to shorten payment
periods, and this will not only be a real challenge, but
also will pose risks to business cash flows. ▣
16

Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Client payment periods: automotive components
Client payment periods in days’ revenue, 2010
100
90
80
70
60
50
40
30
20
10
0
GB
68
ES
83
SE
51
-150% -100% -50% 0% 50% 100%
Supplier payment periods: automotive components
IT
111
FR
54
NO
40
DE
36
BE
67
DK
55
Change
Supplier payment periods in days’ revenue, 2010
120
100
80
60
40
20
0
GB
41
IT
96
FR
53
53
-100% -50% 0% 50% 100%
Source: Euler Hermes
NO
27
ES
52
SE
39
BE
49
DE
36
DK
20
Change
Indicator of change in client payment periods:
automotive components
120
100
80
60
40
20
Cash flow Tension Indicator:
automotive components
60
50
40
30
20
0
10
-20
-40
-60
-80
2007
Source: Euler Hermes
2008
2009
2010
France
Germany
Spain
Italy
United Kingdom
Belgium
0
-10
-20
2006 2007
Source: Euler Hermes
2008
2009
2010
France
Germany
Spain
Italy
United Kingdom
Belgium
Client and supplier payment period gap:
automotive components
Italy
44
41
Spain
Belgium
-1
-4
-3
13
United Kingdom
-11
-2
France
-28
Germany -34
-16
0
-40 -30 -20 -10 0 10 20 30 40 50
Client payment period difference from average of 37 days
Client payment period difference from average of 37 days
Source: Euler Hermes
17

Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
Air transport: an instrument
of globalisation but marked
by regional differences
The air transport sector in our studies is comprised
of passenger transport and airfreight traffic.
From the data we can observe a number of sectoral
and regional characteristics.
Relatively short payment periods
in air transport compared to other
sectors.
▶ Two factors explain this feature, for example on
accounts receivable
> The passenger segment (78% of turnover in the
sector worldwide in 2011) is a B2C (business-toconsumer)
activity, and, due to a high proportion of
payments being made prior to travel, does not generate
significant accounts receivables in airline
accounts.
> Freight transport is subject to legally mandatory
payment periods of no more than 30 days (legal
constraints).
Also note that when carriers buy their aircraft, this is
carried out through medium to long-term financing
which allows them to make staged payments to aeronautics
constructors during the course of the production
of aircraft and then finalise payment once
the aircraft are delivered.
▶ Client payment periods structurally longer in
Europe (44 days’revenue) than in the United States
(22 days).
This is due to two fundamentally different economic
models. The major United States airlines, following
the difficulties encountered in the previous
decade, have clearly refocused on the passenger segment
and heavily reduced (or abandoned) related
activities, to the benefit of domestic or foreign specialist
operators. This nearly ‘pure player’strategy of
the United States companies, looking to concentrate
their resources to optimise their core business,
stands in contrast to the broader operational portfolios
of their European counterparts. Of the latter, the
major players can, to varying degrees, shelter operations
as diverse as passenger traffic (a minimum
75% of turnover) as well as freight, maintenance (to
other airlines, in addition to their own fleets), catering
and IT services. This (highly relative) diversification
is part of a very different economic model –
one designed in order to, among other things, ‘saturate’the
use of their existing infrastructure (generally
very costly material assets) via diverse operations,
and in order to ensure good maintenance of sensitive
equipment, as well as to integrate activities that
are less cyclical and/or new avenues of profitability.
This partial orientation towards buoying B2B activities
automatically translates into lengthened payment
periods for the airlines’accounts receivable.
▶ During the 2008-2009 crisis, very substantial
fluctuations in accounts payable in the United
States (from 46 days in 2008 to 29 days in 2009);
less in Europe (from 35 days’revenue in 2009 to 38
days in 2009).
In a widespread context of falling activity, inherently
stemming from the world economic downturn, the
difference of magnitude in these two markets can be
explained by the concomitant variations in oil prices.
We have to remember the crucial impact of kerosene
prices at that time on the fortunes of airlines. Indeed,
fuel prices account for 30% to 35% of their operating
costs and thus a significant share of their accounts
payable. In face of the sector’s intrinsic exposure to
this factor, different choices were made on opposite
sides of the Atlantic. European carriers, for their part,
chose to use financial instruments to cover a generally
large part of their fuel purchases, which explains the
relative stability – or more correctly the more limited
scale – of the changes their accounts payable, despite
the turbulence in oil (and thus jet fuel) prices. In the
United States, by contrast, financial cover was
undertaken far less – or in cases not at all – being
deemed too expensive, and supplies were obtained
on spot markets, thus explaining the size of American
businesses’accounts payable following the course of
oil prices.
18

Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Client payment periods: air transport
60
Client payment periods in days’ revenue, 2010
Supplier payment periods in days’ revenue, 2010
50
40
30
20
10
80
70
60
50
40
30
20
10
0
ES
34
IT
58
IT
29
GB
17
0
Change
-50% -40% -30% -20% -10% 0% 10%
Supplier payment periods: air transport
US
22
FR
44
DE
31
-30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70%
Source: Euler Hermes
FR
44
DE
29
US
21
GB
25
ES
62
Change
Indicator of change in client payment periods: air transport
100
80
60
40
20
Cash flow Tension Indicator: air transport
20
15
10
5
0
-5
-10
0
-20
-40
2007
2008
2009
2010
France
Germany
Spain
United States
United Kingdom
-15
-20
-25
-30
2006
2007
2008
2009
2010
France
Germany
Spain
Italy
United States
United Kingdom
Source: Euler Hermes
Source: Euler Hermes
Since then, the strategies have evolved, with
European companies generally having
reconsidered the extent and especially the duration
of their cover operations.
▶ A North-South divide in Europe.
The air transport sector reflects the characteristics
of a country’s domestic economic environment,
and hence is no exception to showing longer payment
periods in the south of Europe than in the
north. Thus, supplier payment periods are 25
days’revenue in the United Kingdom, 31 days in
Germany, 44 days in France, 58 days in Italy and 63
days in Spain. ▣
19

Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
Chemicals: supplying industries
and supporting the industrial fabric
via client credit
Between 2003 and 2005, the chemicals sector
went through the bottom of a cycle. It followed this
with large-scale restructuring among operators
that at times disrupted output flows. In 2009, the
sector suffered the impact of the abrupt economic
slowdown on its clientele, especially in the auto
and construction sectors. This gave way to the
appearance of input bottlenecks that in turn
brought an increase in payment periods in the
chemicals sectors of nearly every country.
A limited variation in payment
periods.
▶ Generally, one can say that enormous efforts were
made in the chemicals sector to manage cash flow
requirements. It was rather as if the violent downturn
in activity experienced in 2008-2009 convinced
operators to set right the way they were financing
their operational cycles in order to not (or no longer)
undergo the horrid consequences of suddenly
running out of cash.
The improvement in managing cash flow
requirements in the French chemicals sector has
been genuine. The sector’s cash flow requirements of
8 days’revenue seems the lowest in Europe after The
United Kingdom (3 days). With client payment
periods falling by 8% in 2008 and supplier payment
periods by 12%, the French chemical industry has
come out well, notwithstanding a slight increase in
payment periods in 2009. In 2010, payment periods
dropped below 60 days, with client payment periods
of 58.7 days’revenue and supplier payment periods at
50.9 days, or a total shrinkage of payment periods of
11% between 2006 and 2010.
shows once again a stable and effective management
of operating requirements. The income on cash of the
good performers in the sector is surely the result of a
strategy aimed at cementing the loyalty of their clients
and suppliers via long payment periods for their
customers and a determination to pay their suppliers
relatively quickly.
▶ We should note the singular efforts made by Spain
in its policy of cutting payment periods within its
chemicals sector. Compared to 2006, when client
payment periods were 95 days, Spanish businesses
have reduced the figure by 30%. Payment behaviour
in Belgium is close to that of France: reasonable
payment periods and good cash flow management.
Norway operates within the logic of an integrated
sector, well managing its payment periods and cash
flows. Indeed, despite a slight increase in payment
periods in 2009, the figures are still good, with client
payment periods of 40 days and supplier payment
periods of 31 days, and cash flow requirements of 9
days.
▶ Italy’s heavy cash flow deficits directly result from
its very long client payment periods, even despite
their shortening by 8% since 2006. At 93 days, these
are well beyond the limits of the European Directive
entering into force in March 2013.
▶ In the United States, the chemical industry pays its
suppliers an average of 40 days after invoices are
issued and gets paid by its clients with a payment
period on average equal to 61 days’revenue, resulting
in cash flow requirements of 20 days’revenue. ▣
▶ With shorter client and supplier payment periods
and lower cash flow requirements than in other
countries, the chemicals sector in the United Kingdom
20

Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Client payment periods: chemicals
Client payment periods in days’ revenue, 2010
80
70
60
50
40
30
ES
67
GB
30
FR
59
IT
93
SE
32
DE
46
NO
40
DK
57
BE
58
US
61
Change
20
-40% -30% -20% -10% 0% 10% 20% 30% 40%
Supplier payment periods: chemicals
Supplier payment periods in days’ revenue, 2010
80
70
60
50
40
30
20
10
0
Source: Euler Hermes
IT
63
SE
24
FR
51
ES
46
DE
29
-15% -10% -5% 0% 5% 10% 15% 20%
NO
31
BE
47
GB
28
DK
29
US
41
Change
Indicateur Indicator of change in client payment periods: chemicals
20
Cash flow Tension Indicator: chemicals
50
15
10
40
5
30
0
-5
France
Germany
Spain
20
France
Germany
Spain
-10
-15
Italy
United States
Belgium
United Kingdom
10
Italy
United States
Belgium
United Kingdom
Norway
Norway
-20
2007
2008
2009
2010
0
2006
2007
2008
2009
2010
Source: Euler Hermes
Source: Euler Hermes
Client and supplier payment period gap: chemicals
Italy
25
44
Spain
Belgium
France
7
8
10
12
10
18
Germany
-9
-2
United Kingdom
-18
-11
-30 -20 -10 0 10 20 30 40 50
Client payment period difference from average of 37 days
Supplier payment period difference from average of 53 days
Source: Euler Hermes
21

Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
Pharmaceuticals:
no cash flow problems
Supplier payment periods seem generally shorter
than client payment periods in the
pharmaceuticals industry. Depending on the
country, however, we see an uneven picture in how
payment periods are developing. The
laboratories’advantage of enjoying comfortable
cash flow surpluses from their operations resides in
their ability to pay their suppliers more quickly and
thus benefit from financial discounts. This is more
profitable than placing their funds at low rates of
interest.
In France the rate of non-payment and insolvencies
in the chemicals sector overall is markedly higher
than in the pharmaceuticals segment.
▶ Payment periods are well below 60 days in the
sector in the United Kingdom, Germany and
Denmark. The very short payments benefiting their
suppliers, which even occasion cash flow requirements
in Germany and Denmark, is a means of
consolidating their ties with their partners, allowing
them to benefit from, among other things, financial
discounts.
▶ By contrast, in Spain (-50), Italy (-50) and in the
United States (-55), the industry suffers from a harmful
scissors effect. The length of payment periods that
businesses grant their customers is very generous,
when it is not the result of (as in Spain) the financial
woes of their hospital clientele. Unlike in the United
States, however, Spain and Italy are not relaxing their
efforts to attempt to shorten payment periods (-11%
and -6% since 2006 for client payment periods in
Spain and Italy respectively, compared to +49% in the
United States).
▶ Cash flow management by United States pharmaceutical
companies seems notwithstanding driven
by a more aggressive commercial policy.
Lengthening clients’payment periods is also a way of
reinforcing their loyalty and helping them to avoid
difficult bank lending conditions – in sum, the expression
of a policy more financial than industrial in
nature on the part of the United States pharmaceuticals
sector. The length of these payment periods,
which continue to grow, does put the United States
at the bottom of the class in this sector in terms of the
length of payment periods and of efforts made to
attempt reducing them (client payment periods up
by 49% and supplier payment periods up by 43%).
▶ Apart from a rebound in payment periods in 2009,
the French pharmaceutical industry, fifth in the rankings,
is not letting up on its efforts to shorten them.
In 2010, these were down by 10 days against 2006,
with cash flow needs of 14 days’revenue, well below
the figure for Germany (30 days), Spain (49 days),
Italy (50 days) the United States (55 days) and
Denmark (14 days). Committed to cutting average
payment periods, the pharmaceuticals sector in
Frances does not benefit however from the advantage
it gains by obtaining discounts in return for rapid
payment to its suppliers. ▣
22

Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Client payment periods: pharmaceuticals
Client payment periods in days’ revenue, 2010
120
100
80
60
40
20
0
FR
66
ES
85
IT
90
GB
36
DK
38
BE
63
NO
25
-20% -10% 0% 10% 20% 30% 40% 50% 60% 70%
SE
11
DE
46
US
93
Change
Supplier payment periods: pharmaceuticals
70
Supplier payment periods in days’ revenue, 2010
60
50
40
30
20
10
FR
52
IT
40
NO
16
DE
16
BE
54
DK
20
GB
31
ES
35
SE
11
US
38
Change
0
-30% -20% -10% 0% 10% 20% 30% 40% 50% 60%
Source: Euler Hermes
Indicator of change in client payment periods: pharmaceuticals
30
25
20
15
10
5
0
Cash flow Tension Indicator: pharmaceuticals
80
70
60
50
40
-5
-10
-15
-20
-25
-30
2007
2008
2009
2010
France
Germany
Spain
Italy
United Sates
United Kingdom
Denmark
30
20
10
0
2006
2007
2008
2009
2010
France
Germany
Spain
Italy
United States
United Kingdom
Denmark
Source: Euler Hermes
Source: Euler Hermes
23

Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
IT services:
constrained by their clientele
Major clients have the strong suit in their
negotiations with IT services providers, resulting
for the latter in large cash flow requirements that
weaken businesses in the sector. Indeed, this is the
sector hit hardest by the weight of its accounts
receivable. As a result, it faces a large or very large
scissors effect in every country apart from Sweden.
Moreover, we see rigidity to a reduction in client
payment periods.
▶ Our study reveals very long client payment periods,
but supplier payment periods that are reasonably
good, or even low in some countries. The scissors
effect in very big in every country, but with a more
muted impact in Germany, the United Kingdom,
Belgium and Sweden.
Major clients have the advantage
of the stronger position in
negotiations, resulting in large
cash flow requirements that
weaken businesses in the sector.
▶ In France, despite the LME and a strong response
by the sector to cut these payment periods by 7% from
2006, client payment periods remain long, due to
major public sector customers. On the supplier side,
by contrast, little advance can be expected, inasmuch
as their purchases consist of intellectual services paid
for on a monthly basis, and materials that are already
paid for quickly in order to improve margins.
▶ Germany for its part is seeing a reversal in its cash
flow tension indicator that risks harming businesses
in the sector. Supplier payment periods are down only
slightly, as the initial payment periods were shorter
and there is a sharp separation between IT services
and IT equipment in the country, unlike in France. The
9% increase in client payment periods reflects
weakness in demand, but Germany’s payment
periods remain among the shortest in the sector in
Europe.
▶ The pronounced deterioration in the situation for
businesses in the sector in the United States, and the
more moderate one for those in the United Kingdom
and Belgium, is due primarily to an only small decline
in supplier payment periods and to weak demand. ▣
Client and supplier payment period gap: IT services
Cash flow Tension Indicator: IT services
80
Spain
17
30
70
Italy
16
24
60
France
Belgium
7
7
15
19
50
24
Germany
-24
United Kingdom -21
-27
-18
-30 -20 -10 0 10 20 30 40
Client payment period difference from average of 37 days
Supplier payment period difference from average of 53 days
Source: Euler Hermes
40
30
20
2006 2007
Source: Euler Hermes
2008
2009
2010
France
Germany
Spain
Italy
United State
United Kingdom
Belgium

Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Aeronautic components:
stability in payment periods –
sign of a healthy sector
The sample on which we base our conclusions in
this study is drawn for civil and military aeronautics
activities in the different countries examined.
▶ What sets this sector apart is the extremely high
level of concentration among aeronautics constructors
both in Europe and the United States, whose
levels of activity set the tone for subcontracting. At
the end of the chain, civil aviation constructors (business
or commercial aircraft, essentially in the zones
examined) benefit from advances paid by the airlines
ordering aircraft, staged from the signing of contracts
until delivery, in order to finance the production cycle
(with very high inventories and exposure). Moreover,
at times there are payments on account, higher upstream
in the chain, helping to ease cash flows.
With the notable exception of
Spain, the last three years have
seen relative stability in payment
periods.
▶ France, however, seems to show the impact of the
entry into force of the LME, with supplier payment
periods falling from 77 days in 2008 to 49 days in
2010, while in the United States, 2008 reflected the
destabilisation in the sector brought about by the
long strike at Boeing. This overall resistance, in the
face of the difficult economic situation that affected
all industrial sectors, is the sign of the excellent health
of the commercial aviation sector, buoyed by nearly
constantly increasing production, by contrast with
business aviation, which was seriously affected by falling
production and order books over the same
period.
▶ Not contradicting the distinction between
Northern and Southern Europe, already well demonstrated
in many sectors, and despite the convergence
in the sector towards a restricted number of customers,
the longest payment periods are in Italy (with
supplier payment periods of 60 days’revenue in
2010) and especially Spain (131 days in 2010). This
situation is grounded in local practices but is also
clearly due to the domestic economic environment
– particularly in the case of the big lengthening in
Spain, where supplier payment periods doubled between
2008 and 2010. Operators in both these countries
are thus exposed to penalising consequences
from the approaching application of the European
Directive. ▣
Client payment periods: aeronautic components
Client payment periods in days’ revenue, 2010
Supplier payment periods in days’ revenue, 2010
200
150
100
50
160
140
120
100
80
60
40
20
0
IT
67
IT
60
GB
40
ES
131
FR
65
FR
49
US
42
ES
153
DE
20
Change
0
-30% -10% 10% 30% 50%
Source: Euler Hermes
Supplier payment periods: aeronautic components
-40% -30% -20% -10% 0% 10% 20% 30% 40%
Source: Euler Hermes
GB
44
US
67
DE
51
Change
25

Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
Construction: the sector
with the greatest disparities
Payment periods in large part reflect the particular
economic environment of the country in question.
This is a domestic sector in with
exceptional payment periods in
some countries.
> In France, the sector benefits from derogation in
payment periods.
Nonetheless, efforts are needed to shorten payment
periods. In fact, on 14 February, the then Minister in
charge of consumption, Frédéric Lefebvre, announced
an intensification of monitoring measures in
order to reduce payment periods deemed to be too
long. In 2012, the sector is supposed to begin posting
payment periods within the LME norms (45 days
from the end of the month or 60 days from the
invoice date). However, according to the Minister, the
reality is quite different, with payment periods running
between 76 and 92 days. The then government
wanted to introduce an amendment to the legislation
that would allow entrepreneurs to suspend work
in the event of late payments on intermediate instalment
invoices, the aim being to end the growing
number of cases of the law being circumvented. Even
though the effects of the LME and derogation agreements
are impacting on payment periods, it is hard
in this sector to reduce client payment periods due to
the nature of the clientele (individuals, the State and
state-owned enterprises in the sector). By our estimates,
this impacts negatively on businesses in the
sector.
> Late payments are frequent in Spain, despite
already long contractual payment periods, and only a
small scaling back of extremely long client payment
periods has been achieved, by around only half as
much (-10%) as was achieved in Germany (-16%).
> In Italy, the construction sector is made up of many
businesses with low shareholders’capital, and the
weakness in demand has translated into long
payment periods and a sharp increase in cash flow
requirements.
> In the United Kingdom, public intervention helped
sustain activity in the construction sector but acted to
slow the reduction in client payment periods. The
United Kingdom shows a relatively coordinated
reduction in payment periods, at close to the average.
> In Belgium, businesses in the building and civil
engineering sector are unable to meet the client
payment periods imposed by the authorities, holding
back reductions in supplier payment periods in
response. Government authorities and especially
local authorities pay very late, a trend that is
accentuating.
> In the United States, we see an increase in supplier
payment periods (+18%), due to a fall in demand and
the large number of residences for sale. Client
payment periods have also risen considerably (+46%)
in this extremely poor market environment, on top of
which it is also difficult for prices of new-build housing
to rise. ▣
> In Germany, the strict application of late payment
penalties allows a better result than does the LME as it
is applied in France. As a result, payment periods are
half as long as they are for French businesses in the
sector. We see a coordinated reduction in payment
periods and in cash flow requirements in the German
construction market, now lacklustre primarily for
demographic reasons.
26

Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Client payment periods: construction
Client payment periods in days’ revenue, 2010
200
150
100
50
DE
41
SE
47
ES
174
BE
82
FR
87
NO
63
GB
33
IT
127
DK
57
US
53
0
-20% -10% 0% 10% 20% 30% 40% 50%
Change
Supplier payment periods: construction
Supplier payment periods in days’ revenue, 2010
200
150
100
50
BE
70
0
-80% -60% -40% -20% 0% 20%
Source: Euler Hermes
SE
27
FR
57
DE
28
IT
114
GB
38
ES
157
DK
38
NO
33
US
43
Change
Indicator of change in client payment periods: construction
25
20
Cash flow Tension Indicator: construction
40
35
15
30
10
5
25
20
15
0
10
-5
-10
-15
France
Germany
Spain
Italy
United States
United Kingdom
5
0
-5
France
Germany
Spain
Italy
United States
United Kingdom
-20
2007
2008
2009
2010
Belgium
-10
2006
2007
2008
2009
2010
Belgium
Source: Euler Hermes
Source: Euler Hermes
Client and supplier payment period gap: construction
Spain
109
113
Italy
66
66
Belgium
France
9
22
21
26
Germany
-20
-20
United Kingdom
-28
-10
-40 -20 0 20 40 60 80 100 120 140
Source: Euler Hermes
Client payment period difference from average of 37 days
Supplier payment period difference from average of 53 days
27

Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
Four determinants
to note
▶ There are four determining factors
explaining these disparities between sectors:
> 1. The organisation of the sectors themselves, an example being the
round table in the automotive components sector in France, which
enabled subcontractors to even out client and supplier payment
periods.
> 2. When the suppliers are global, sectors such as chemicals benefit
from a limited variation in payment periods.
Comparison between
Germany-France
> 3. The health of the sector, an example being the construction sector
in Spain, which shows the difficulties undergone because of the
crisis.
> 4. The negotiating strength of big clients and big suppliers who
impose longer payment periods, such as in the IT services sector.
▶ Payment periods by sector
Germany
Aeronautic
components
Automobiles
National
average
Air transport
Automotive
components
Construction
Chemicals
Pharmaceuticals
IT services
15 days 35 55
France
Automobiles
Air transport
Automotive
components
National
average
Chemicals
Aeronautic
components
Pharmaceuticals
Construction
IT services
40 days 60 80 100
Source: Euler Hermes
28

Economic Outlook n° 1182 | Special Dossier | Payment periods
Annexes
Annex I
▶ Law on the Modernisation of the Economy
(LME) and sector round tables in France
Round tables in the automotive components sector
In France: the code of good practice of28 June 2006 allows for balanced and more lasting and harmonious
client/supplier relations through the sector, where the client must:
> send a late payment penalty without the supplier having to request it
> not alter the payment term for reasons not set out in the contract (notably arising from internal failings
in its administrative departments)
> furnish a means of payment that can be mobilised or financed to the supplier who requests it and do
so within 20 days of receiving the invoice, in the absence of any litigation
LME in pharmaceuticals
Following the implementation of the LME of 2008
in France, subject to the decree of 22 September,
trade associations representing French pharmacies
signed an accord with the trade association of
French pharmaceutical manufacturers (LEEM) to
be applied gradually to payments for non-prescription
drugs, which account for 10% of the pharmaceuticals
market.
According to the AFIPA, the trade body that represents
the self-medication medicines industry,
payment periods for non-prescription medicines
were much longer than for other medicines, running
from 180 days to 360 days for seasonal products
(e.g., winter remedies and anti-allergy
drugs).
Agreement on payment periods of 27 January: additional to the code of good practice for payment
periods:
> the payment period between clients and subcontractors is cut to a maximum of 90 days effective 1 September
Client businesses in the sector with turnover in excess of 300 million euros will give an additional reduction
in payment periods of 30 days to suppliers with turnover of less than 50 million euros, according
to the following modalities: maximum payment periods of 75 days effective 1 September and of 60 days
effective 1 September.
LME construction
In France: under derogation in the construction and
civil engineering sector, the parties agree the following
maximum payment periods:
> 70 days from end of month effective 1 January
> 60 days from end of month effective 1 January
> 50 days from end of month effective 1 January
> 45 days from end of month effective 1 January
In France: under a derogation for non-prescription
drugs, the payment periods agreed by the
parties to settle invoices due may not exceed:
> 90 days from invoice date for 2009
> 70 days from invoice date for 2010
> 60 days from invoice date from 1 January.
These payment periods run from the date of issue
of the invoice.
The 35 derogations of the LME
> toys; DIY; watches and jewellery; construction and civil engineering; plumbing, heating
and electrical equipment; book publishing; stationery and office supplies; tyres; metal
packaging closures and metal tins for food; optional non-reimbursable prescription
drugs; sales of pets, products and accessories for pets; two or three-wheeled motorised
and quad bikes; boating; amateur gardening; industrial equipment and hardware; agricultural
supplies; agricultural equipment; paints, inks, colours, glues and adhesives; optical
spectacles; cooperage; sporting goods; print industry; music CDs and DVDs; amateur
fishing; arts and crafts; leather; steel products for construction; recreational vehicles;
marine and inland aquaculture; food supplements; roundwood logs and standing
timber; wholesaling of automotive tools; hunting arms and ammunition; textiles and
clothing.
29

Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
Annex II
▶ Payment defaults in Italy
A close examination of payment defaults of Italian
businesses reveals great disparities between
regions and sectors via two key indicators: the rate
of non-payment and the severity (average
amount) of missed payments.
On the domestic market, the victims of the crisis in
consumption, of international competition (e.g.,
footwear) or of the rise in energy prices (e.g., paper
manufacturing) saw default amounts increase.
Chemicals also saw a rise in these amounts.
Exports, a key element in the Italian economy in 2011,
now are a matter of great concern over the rate of
payment defaults in industry, agriculture, foods,
chemicals and mechanical engineering.
Italy’s strong exports to troubled economies such as
Spain, Greece and Portugal have a considerable
impact on the severity of non-payments. We also see
an increase in the average payment default amount in
the steel, footwear and construction sectors.
Regional disparities are increasing in the crisis: the
south and centre of Italy are more exposed to liquidity
problems during economic slowdowns. In the north
of the country, in Piedmont and Liguria, show a
sustained trend of increasing rate (depending on the
production specialisation in these regions, i.e.,
automobiles and naval industries). In central and
southern regions, the trend deteriorates more quickly,
with some diverging trends for certain regions like
Molise and Calabria, which are just improving after a
deep crisis. ▣
Italy -
Domestic market – 2007 to March 2012 trend
(basis, 2007 = 100) (basis, 2007 = 100)
Italy -
Export market – 2007 to March 2012 trend
200
150
150
120
100
90
50
60
Rate
Amount
0
Q1
2008 2009 2010 2011 2012*
Source: Euler Hermes
Rate
Amount
30
Q1
2008 2009 2010 2011 2012*
Source: Euler Hermes
30

Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Annexe III
▶ Detailed data, by country
Germany Client Supplier Client Supplier Cash flow
payment payment payment period payment period tension
period period growth indicator growth indicator indicator
2000 30 21.6 8.3
2001 27.3 19.7 -9% -8.9% 7.6
2002 26.6 19.2 -2.4% -2.6% 7.4
2003 26.1 19.0 -1.8% -0.8% 7.1
2004 25.5 18.9 -2.2% -0.8% 6.7
2005 25.3 18.7 -1% -0.9% 6.6
2006 25.4 18 0.5% -3.8% 7.4
2007 25.2 18.5 -0.8% 2.6% 6.7
2008 22.6 16.7 -10.2% -9.5% 5.9
2009 23.4 17.1 3.6% 2.5% 6.3
2010 23.7 18.5 1% 7.9% 5.2
2011 23.5 18.5 -1% 0% 5
2012 23.3 18.5 -0.5% 0% 4.9
2013 23.1 18.5 -1% 0% 4.6
Poland Client Supplier Client Supplier Cash flow
payment payment payment period payment period tension
period period growth indicator growth indicator indicator
2005 45.4 45.3 0.1
2006 45.6 44.6 0.4% -1.4% 0.9
2007 44.5 43.7 -2.3% -2.2% 0.9
2008 43.7 43.3 -1.8% -0.9% 0.4
2009 44.3 44.1 1.3% 2.0% 0.1
2010 45.3 44.9 2.3% 1.8% 0.4
2011 44.1 43.3 -2.7% -3.7% 0.8
2012 43.2 42.3 -2.0% -2.3% 0.9
2013 42.1 41.1 -2.5% -2.7% 1
France Client Supplier Client Supplier Cash flow
payment payment payment period payment period tension
period period growth indicator growth indicator indicator
2000 68.0 58.3 9.6
2001 64.5 56.2 -5.1% -3.6% 8.3
2002 63.2 55.1 -2.0% -2.0% 8.1
2003 62.4 54.3 -1.2% -1.5% 8.2
2004 61.2 54.0 -2.0% -0.6% 7.2
2005 63.3 55.3 3.4% 2.5% 8
2006 63.4 55.5 0.3% 0.3% 8
2007 63.2 55.8 -0.3% 0.7% 7.4
2008 63.1 53.2 -0.2% -4.7% 9.9
2009 60.7 51.1 -3.7% -4.1% 9.7
2010 61.4 52.4 1.1% 2.6% 9
2011 62 53.2 0.9% 1.6% 8.7
2012 62.3 53.2 0.5% 0% 9
2013 62.9 53.8 1% 1% 9.1
Belgium Client Supplier Client Supplier Cash flow
payment payment payment period payment period tension
period period growth indicator growth indicator indicator
2000 69.8 56.9 12.9
2001 67.3 54.4 -3.6% -4.3% 12.8
2002 64 43.7 -4.8% -19.6% 20.3
2003 67,8 53.8 5.9% 23.1% 13.9
2004 72.1 58.2 6.5% 8.1% 13.9
2005 65.9 53.5 -8.6% -8.1% 12.4
2006 64.3 51.8 -2.5% -3.2% 12.5
2007 65.5 51.8 2% 0% 13.7
2008 60.7 47.3 -7.3% -8.7% 13.4
2009 64.8 51.8 6.7% 9.4% 13
2010 63.2 52.2 -2.5% 0.9% 11
2011 61.6 50.7 -2.5% -2.9% 10.9
2012 61.6 50.7 0% 0% 10.9
2013 60.7 49.8 -1.5% -1.8% 10.9
Spain Client Supplier Client Supplier Cash flow
payment payment payment period payment period tension
period period growth indicator growth indicator indicator
2000 69.6 64.2 5.3
2001 69.5 64.2 -0.1% 0% 5.3
2002 70.6 64.6 1.5% 0.7% 5.9
2003 69.2 64.7 -1.9% 0.1% 4.5
2004 69.8 64.8 0.8% 0.2% 4.9
2005 71.2 67.0 2% 3.3% 4.2
2006 71.5 67.4 0.4% 0.6% 4.1
2007 73.5 69.5 2.9% 3.1% 4
2008 70.6 66.9 -3.9% -3.8% 3.8
2009 80.9 75.3 14.6% 12.6% 5.6
2010 79.0 75.3 -2.4% 0% 3.6
2011 78.3 74.8 -0.9% -0.8% 3.5
2012 80.2 76.3 2.5% 2% 4
2013 80.6 76.6 0.5% 0.5% 4
Italy Client Supplier Client Supplier Cash flow
payment payment payment period payment period tension
period period growth indicator growth indicator indicator
2000 105.9 85.7 20.2
2001 102.7 81.9 -3% -4.5% 20.8
2002 106.1 83.3 3.3% 1.8% 22.8
2003 105.2 82.6 -0.9% -0.9% 22.6
2004 102.4 82.2 -2.7% -0.5% 20.2
2005 104.5 83.8 2.1% 2% 20.7
2006 102.8 81.2 -1.7% -3.2% 21.6
2007 100.8 80.8 -1.9% -0.5% 20
2008 99.6 77.2 -1.2% -4.4% 22.4
2009 106.8 82.5 7.2% 6.9% 24.2
2010 105.9 82.3 -0.8% -0.3% 23.7
2011 105.3 81.8 -0.6% -0.5% 23.5
2012 107.4 83.5 2% 2% 24
2013 107.4 83.5 0% 0% 24
Portugal Client Supplier Client Supplier Cash flow
payment payment payment period payment period tension
period period growth indicator growth indicator indicator
2000 68.3 51.6 16.7
2001 71.4 53.8 4.6% 4.4% 17.6
2002 69.6 53.7 -2.6% -0.2% 15.9
2003 70.9 55.3 1.8% 3% 15.5
2004 70.1 55.4 -1% 0.1% 14.7
2005 69.0 54.8 -1.6% -1.2% 14.2
2006 76.4 64.4 10.8% 17.6% 12.0
2007 76.8 64.8 0.4% 0.6% 12.0
2008 72.7 61 -5.3% -5.8% 11.7
2009 79.8 65.3 9.8% 6.9% 14.6
2010 81.7 66.3 2.3% 1.6% 15.4
2011 82.3 66 0.8% -0.4% 16.3
2012 83.6 65.4 1.5% -1.0% 18.2
2013 83.6 65.4 0% 0% 18.2
Source: Euler Hermes
31

Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
Annexe IV
▶ Detailed data, by sector
Automobiles Client Supplier Client Supplier Cash flow
payment payment payment period payment period tension
period period growth indicator growth indicator indicator
France 41 50 1% -12% -8
Germany 21 34 14% 45% -13
Spain 48 56 -27% 10% -8
Italy 37 75 -12% -4% -38
United States 42 79 -97% -86% -37
United Kingdom 31 34 56% 26% -3
Belgium 41 69 -6% 27% -28
Denmark 40 45 10% 33% -5
Norway 45 47 -23% 10% -2
Sweden 19 37 -47% 15% -18
Automotive Client Supplier Client Supplier Cash flow
components payment payment payment period payment period tension
period period growth indicator growth indicator indicator
France 54 53 -21% -21% 2
Germany 36 24 0% -4% 12
Spain 83 52 -18% 2% 31
Italy 111 96 3% -2% 14
United Kingdom 68 41 -12% -30% 26
Belgium 67 49 -17% -14% 18
Denmark 55 20 -2% -5% 35
Norway 40 27 -33% -14% 13
Sweden 51 39 -26% -9% 12
Chemicals Client Supplier Client Supplier Cash flow
payment payment payment period payment period tension
period period growth indicator growth indicator indicator
France 59 51 -11% -8% 8
Germany 46 29 -3% 1% 17
Spain 67 46 -30% -1% 21
Italy 93 63 -8% -9% 30
United States 61 41 22% 16% 20
United Kingdom 30 28 -15% 10% 3
Belgium 58 47 14% 7% 12
Denmark 57 29 11% 12% 28
Norway 40 31 1% 4% 9
Sweden 32 24 -7% -9% 8
Pharmaceuticals Client Supplier Client Supplier Cash flow
payment payment payment period payment period tension
period period growth indicator growth indicator indicator
France 66 52 -13% -16% 14
Germany 46 16 41% -10% 30
Spain 85 35 -11% 18% 50
Italy 90 40 -6% -15% 50
United States 93 38 49% 43% 55
United Kingdom 36 31 -1% 7% 5
Belgium 63 54 12% 7% 9
Denmark 38 20 2% 4% 18
Norway 25 16 16% -11% 9
Sweden 11 11 31% 25% 0
Construction Client Supplier Client Supplier Cash flow
payment payment payment period payment period tension
period period growth indicator growth indicator indicator
France 87 57 -6% -18% 30
Germany 41 28 -16% -19% 13
Spain 174 157 -10% -3% 17
Italy 127 114 -1% -6% 13
United States 53 43 46% 18% 11
United Kingdom 33 38 -2% -10% -5
Belgium 82 70 -10% -13% 12
Denmark 57 38 -11% -9% 19
Norway 63 33 -10% -21% 30
Sweden 47 27 -5% 6% 21
IT services Client Supplier Client Supplier Cash flow
payment payment payment period payment period tension
period period growth indicator growth indicator indicatorr
France 95 51 -7% 3% 44
Germany 52 25 9% -8% 27
Spain 107 61 -14% 14% 46
Italy 101 60 -2% -5% 41
United States 72 21 16% -10% 51
United Kingdom 50 23 0% -12% 27
Belgium 84 58 -4% -10% 25
Denmark 54 26 -17% 5% 28
Norway 64 25 -8% -3% 39
Sweden 33 23 -5% -7% 9
Air Client Supplier Client Supplier Cash flow
transport payment payment payment period payment period tension
period period growth indicator growth indicator indicator
France 44 44 -2% 8% 1
Germany 29 31 2% 14% -2
Spain 34 62 -45% 51% -29
Italy 29 58 -35% -16% -30
United States 21 22 5% 5% -1
United Kingdom 17 25 -29% 43% -8
Belgium 51 49 47% 12% 3
Denmark 15 23 -13% -17% -8
Norway 21 19 -19% -30% 2
Sweden 12 17 -31% -6% -5
Aeronautic Client Supplier Client Supplier Cash flow
components payment payment payment period payment period tension
period period growth indicator growth indicator indicator
France 65 49 -5% -14% 16
Germany 20 51 -21% 37% -32
Spain 153 131 8% -17% 22
Italy 62 60 -22% -31% 2
United States 67 42 42% -15% 25
United Kingdom 40 44 -12% 5% -4
Note: client payment period, supplier payment period and cash flow tension indicator are for 2010; client and supplier period growth indicators are for 2006-2010.
Source: Euler Hermes
32

Economic Outlook n° 1182 | Special Dossier | | Payment periods
Euler Hermes
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New Area, Shanghai, 200120
Tel.:+86 21 6030 5900
> Colombia
Euler Hermes Colombia
Calle 72 6-44 Piso 3
Édificio APA
Bogota
Tel.: +571 326 4640
> Czech Republic
Euler Hermes Europe S.A.
organizacni slozka
Molákova 576/11
186 00 Prague 8
Tel.:+420 266 109 511
> Demmark
Euler Hermes Danmark, filiale de
filial af Euler Hermes Europe SA Belgien
Amerika Plads 19
2 100 Copenhague O
Tel.:+45 88 333 388
> Estonia
Please contact Finland
> Finland
Euler Hermes Europe S.A.
Suomen sivuliike
Mannerheimintie 105
00280 Helsinki
Tel.:+358 10 850 8500
> France
Euler Hermes France SA
Euler Hermes Collection
Euler Hermes World Agency
1, place des Saisons
F-92048 Paris-La-Défense Cedex
Tel.: +33 1 8411 5050
> Germany
Euler Hermes Deutschland AG
Euler Hermes Rating Deutschland AG
Friedensallee 254
22763 Hamburg
Tel.: +49 40 8834 0
Federal Export Credit Guarantees
Friedensallee 254
22763 Hamburg
Tel.: +49 40 8834 9000
Hong Kong
Tel.:+852 2867 0061
> Hungary
Euler Hermes Europe S. A
Magyarrorszagi Fioktelepe
Kiscelli u. 104
1037 Budapest
Tel.: +36 1 453 9000
> India
Euler Hermes India Pvt. Ltd
4th Floor, Voltas House
23, j N Heredia Marg
Ballard Estate
Mumbai 400 001
Tel.:+91 22 6623 2525
> Indonesia
PT Asuransi Allianz Utama Indonesia
SSummitmas II. Building, 9 th floor
jl. jenderal Sudirman Kav 61-62
jakarta 12190
Tel.: +62 21 252 2470 ext. 6100
> Ireland
Euler Hermes Ireland
The Arch
Blackrock Business Park
Carysfort Avenue
Blackrock
Co. Dublin
Tel.:+353 1 200 0400
> Israël
ICIC
2, Shenkar Street
68010 Tel Aviv
Tel.: +97 23 796 2444
> Italy
Euler Hermes Europe S.A.
Rappresentanza per l’Italia
Via Raffaello Matarazzo, 19
00139 Rome
Tel.:+39 06 87001
> japan
Euler Hermes Deutschland AG,
japan Branch
Kyobashi Nisshoku Bldg. 7th floor
8-7, Kyobashi, 1-chome,
Chuo-Ku
Tokyo 104-0031
Tel.:+81 3 35 38 5403
> Kuwait
Please contact United Arab Emirates
33

Euler Hermes
Economic Outlook n° 1182 | Special Dossier | Payment periods
34
> Latvia
Please contact Poland
> Lithuania
Please contact Poland
> Malaysia
Please contact Singapore
> Mexico
Euler Hermes Seguro de Crédito S.A.
Blvd. Manuel Avila Camacho #164, 8° piso
Col. Lomas de Barrilaco
Deleg. Miguel Hidalgo
Mexico DF CP 11010
Tel.:+52 55 5201 7900
> Morocco
Euler Hermes Acmar
37, bd Abdelatiff Ben Kaddour
20 050 Casablanca
Tel.:+212 5 22 79 03 30
> The Netherlands
Euler Hermes Kredietverzekering NV
Pettelaarpark 20
5216 PD’s-Hertogenbosch
Tel.:+31 73 688 99 99
> New Zealand
Euler Hermes New Zealand Ltd.
Level 1, 152 Fanshawe Street
Auckland 1010
Tel.:+64 9 354 2995
> Norway
Euler Hermes Norge
Holbergsgate 21
P.O. Box 6875
St. Olavs Plass
0130 Oslo
Tel.:+47 23 25 6000
> Oman
Please contact United Arab Emirates
> Philippines
Please contact Singapore
> Poland
Towarzystwo Ubezpieczen Euler Hermes S.A.
ul. Domaniewska 50 B
02-672 Warsaw
Tél.:+48 22 363 6363
> Portugal
COSEC - Companhia de Seguro de Créditos, S.A.
Avenida da República, nº 58
1069-057 Lisbon
Tel.:+351 21 791 3700
> Qatar
Please contact United Arab Emirates
> Romania
Euler Hermes Europe SA Bruxelles
Sucursala Bucuresti
Str. Petru Maior Nr.6
Sector 1
011264 Bucarest
Tel.:+40 21 302 0300
> Russia
Euler Hermes Credit Management OOO
Office C08, 4-th Dobryninskiy per., 8,
Moscou, 119049
Tel.:+7495 98128 33 ext.4000
> Saudi Arabia
Please contact United Arab Emirates
> Singapour
Euler Hermes Singapore Services Pte Ltd
3 Temasek Avenue
# 03-02 Centennial Tower
Singapour 039190
Tel.:+65 6297 8802
> Slovakia
Euler Hermes Europe SA, poboka poist’ovne z
ineho clenskeho statu
Plynárenská 1
82109 Bratislava
Tel.:+421 2 582 80 911
> South Africa
Please contact Italy
> South Korea
Euler Hermes Credit Underwriters HK Ltd.
Korea Liaison Office
Rm 1411, 14/F, Sayong - Platinum Bldg
156, Cheokseon-dong,
Chongro-ku,
Seoul 110 052,
Tel.:+82 2 733 8813
> Spain
Euler Hermes Crédito,
Sucursal en España de Euler Hermes SFAC, S.A.
Paseo de la Castellana, 95
Planta 14
Edificio Torre Europa
28046 Madrid
Tel.:+34 91 417 77 67
> Sri Lanka
Please contact Singapore
> Sweden
Euler Hermes Sverige filial
Klarabergsviadukten 90
P.O. Box 729
111 64 Stockholm
Tel.:+46 8 55 51 36 00
> Switzerland
Euler Hermes Deutschland AG,
Zweigniederlassung Zürich
Tödistrasse 65
8002 Zürich
Tel.:+41 44 283 65 65
Euler Hermes Reinsurance
Tödistrasse 65
8002 ZürichTel.:+41 44 283 65 85
> Taiwan
Please contact Hong Kong
> Thailand
Allianz C.P. General Insurance Co., Ltd
323 United Center Building, 30 th Floor
Silom Road.
Bangrak, Bangkok 10500
Tel. + 66 2638 9000
> Tunisia
Please contact Italy
> Turkey
Euler Hermes Turkiye
Iz Plaza Giz Ayazağa Yolu
Eski Büyükdere Cad. No: 9 Kat: 14
Maslak/Istanbul
Tel.:+90 212 290 76 10
> United Arab Emirates
Euler Hermes
c/o Alliance Insurance Co (PSC)
Warba Center 4 th Floor
Office 405
PO Box 183957
Dubai
Tel.:+971 4 211 6005
> United Kingdom
Euler Hermes UK
1 Canada Square
Londres E14 5DX
Tel.:+44 20 7 512 9333
> United States
Euler Hermes North America
Insurance Company
800 Red Brook Boulevard
Owings Mills, MD 21117
Tel.:+1410 753 0753
Euler Hermes UMA Inc.
(trade debt collection)
600 South 7th Street
Louisville, KY 40201-1672
Tel.: +1 800 237 9386
> Vietnam
Please contact Singapore
Subsidiaries
Registered office: Euler Hermes Group
1, Place des Saisons
92 048 Paris La Défense CEDEX
France
Tel.:+33 (0) 1 84 11 53 77
Fax:+33 (0) 1 84 11 54 87
www.eulerhermes.com

Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Economic Outlook
series…
N° 1170 > Special Dossier
Rebound in worldtrade in 2010 confirms the shift already underway before the crisis.
N° 1171 > Business Insolvency Worldwide
The fall ininsolvencies is confirmed, but on a modest scale and in uneven fashion.
N° 1172 > Global Macroeconomic Review
In the face of slowdowns and turbulence, world economic recovery is going through tumultuous times.
N° 1173 > Global Sectors Review
Global economic recovery continues, but new threats are arising.
N° 1174 > Business insolvency in France (only available in French)
The decline ininsolvencies remains modest overall and stillvery uneven, with a high number of cases.
The French economic environment - the slowdown continues.
N° 1175 > Global Macroeconomic Perspectives
The slowdown is confirmed, the weaknesses remain, the risks endure.
N° 1176 > Special Dossier
Green Economy.
N° 1177-1178 > Macroeconomic, Risk and Insolvency Outlook
On the edge.
N° 1179 > Global Sectors Review
Looking for growth where it can be found.
N° 1180 > Business insolvency in France (only available in French)
The overall decrease in French insolvencies hides several weaknesses.
N° 1181 > Macroeconomic, Risk and Insolvency Outlook
A fog cannot be dispelled by a fan.
N° 1182 > Special Dossier
Payment periods in Europe: wide gaps
To come:
N° 1183-84 > Macroeconomic, Risk and Insolvency Outlook
35

joncture internationale et risques pays
ralentissement se confirme,
s faiblesses demeurent,
s risques persistent
www.eulerhermes.com
Euler Hermes Economic Outlook is published quaterly
by the Economic Research Department of Euler Hermes
1, place des Saison, 92048 Paris La Défense Cedex - Tel. : +33 (0) 1 84 11 53 77
This document reflects the opinion of the Economic Research Department of Euler Hermes.
The information, analyses and forecasts contained herein are based on the Department's current hypotheses and viewpoints
and are of a prospective nature. In this regard, the Economic Research Department of Euler Hermes has no responsibility for
the consequences hereof and no liability. Moreover, these analyses are subject to modification at any time.