Europe's payment terms follow the sun

Payment terms across Europe are leaving suppliers in even worse positions than previously, in spite of government statements and codes of practice. The rule seems to be, the warmer the country, the worse the delays, says one expert.

An second annual survey of global credit trends and risks, which last year highlighted the escalating problem of late payment in business, is expected to show that more than two thirds of suppliers are being paid late by customers.

P&A Receivables PLC, which provides international credit management and debt collection services, has designed the survey in partnership with the MSc in Finance at the UK’s Sheffield Hallam University’s Business School. The second annual survey of global credit trends and risks, which last year highlighted the escalating problem of late payment in business, launches in February.

Last year the survey revealed that more than two years after the introduction of a code of conduct to crack down on late payment in business the problem is getting worse. The survey of credit and finance professionals showed that more than two thirds of leading international and UK suppliers were being paid late by their customers.

Laurie Beagle, divisional director at P&A Receivables, is the founder and chair of several international credit forums run by P&A which bring together credit and senior managers from corporates in diverse industry sectors across the world. He tells IT Europa: “Running the survey again this year will show the trend. I don’t expect it show an improvement. We know from forum members that there are still great concerns about late payment, particularly in the light of the Euro Zone crisis. The survey helps them weigh up the risks of trading in certain counties and with particular sectors.”

Across Europe, the trend seems to be: the higher the temperature the slower the payment: Northern Europe – always good. Southern Europe is always late, particularly in the public sector, for example, the Greek government can take two years or more to pay. And there are signs that Central and Eastern Europe is slowing in payment times.

“Even in Western Europe where Germany is usually good, we are seeing a general slowdown that has been going on for a long time. Big companies are using their muscle on the smaller suppliers. It is now more dependent on how much the customer needs the next supply."

A lot has to do with the Euro crisis which is having a distinct impact on payments. "A final point is that last year there was an increase in requests for extended terms, both permanent and for the short term to cover specific deals.”