EU Mandatory Payment Terms Welcomed By Businesses, Says Atradius Study

(Cardiff, 20 October 2010)

As the European Parliament votes today to pass legislation on mandatory payment terms across the EU, leading trade credit insurer Atradius publishes a survey of almost 4000 businesses and their feelings on mandatory terms coming into effect. British businesses were amongst the keenest, with 61% welcoming the move, second only to Spain at 64%. The survey sought opinions from Europe, North America and Asia on the impact of fixed payment terms of 30 to 60 days on B2B and business to government transactions. The legislation, which still requires today’s approval from the full European Parliament, would tighten current EU late payment legislation.

Most businesses questioned felt that, though not easily enforceable, mandatory payment terms would nonetheless improve the ease of collecting against invoices, the efficiency of receivables management and thus credit management practices overall. However in certain nations this would prove testing. In Italy,for exmple, payment terms of 90 days are common, so a cultural shift in credit management practices will be required. Despite this, Italian respondents were amongst those most strongly in favour with 59% suggesting that mandatory payment terms would be good for business.

A further finding was that respondents from outside the EU were the most enthusiastic,
particularly those in China selling into the EU. 69% of Chinese businesses were positive about the legislation, which would mean that they could adopt the EU model when selling to EU buyers to simplify their receivables management practices, helping close any cultural divide and improving efficiencies through the use of compatible practices.

Those countries least in favour reflected their existing payment standards. Switzerland (46%) and Denmark (34%), for example, had the highest percentage of respondents anticipating no change in their payment terms as a result of the legislation, which already stands at fewer than 30 days. In six of the countries surveyed, respondents who invoice at fewer than 30days currently anticipated requests from their customers for longer terms, up to the 30 days, should the legislation be enforced.

Commenting on the findings of the survey, Marc Henstridge, Head of Risk for Atradius UK and Ireland said:

 “Cash flow is critical to businesses and there is a strong case for anything which will help this along. Having said that, it still won’t provide a guarantee that business will get paid on time – there is no substitute for good credit management practices and a plan to mitigate the risk of non payment – business still need to look after themselves.”

About Atradius
The Atradius Group provides trade credit insurance, surety and collections services worldwide, and has a presence through 160 offices in 42 countries. Atradius has access to credit information on 52 million companies worldwide and makes more than 22,000 trade credit limit decisions daily. Its products and services aim to reduce its customers’ exposure to buyers who fail to pay for the products and services they buy. With total income of more than EUR 1.7 billion and approximately 31% share of the global trade credit insurance market, its products help protect companies throughout the world from payment risks associated with selling products and services on credit.
 

For further information:
Atradius Corporate Communications
Jo Aaron
Tel.: +44 (0) 2920 824873
E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it                                                                                             www.atradius.co.uk