Payment Periods in Europe - Euler Hermes

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