European Payment Practices Results from EOS Ten Nations Survey 00 Hong Kong, December th Payment Practices 00 EOS
Background Financial decision makers from various sectors in 0 countries participated in the EOS Survey 00 European Payment Practices Objective Together with Ipsos, the market research institute, the international EOS Group, which provides receivables management, marketing and risk information and payment services, surveyed local payment practices at,00 companies in 0 European countries Target group Companies with at least 0 employees and an annual turnover of at least EUR 5 million ) from the sectors: Trade (including mail order business) Industry Services Target subject Decision-makers in the fields of debt collection/ dunning services and/or credit/risk management ) at least EUR million, Poland at least EUR million, Bulgaria at least EUR million, Slovakia at least EUR million Payment Practices 00 EOS
Survey Analysis Outstanding Receivables BB Greek and Spanish companies allow the long payment terms up to 05 days in average and concurrently facing high bad debt rates Proportion of bad debts in % 5 Russia and Germany set the shortest payment terms German business is rewarded with punctual payment of 5% on average Bulgarian companies face bad payment behavior and high bad debt rates at relatively short payment terms of on average days Germany, Poland, Slovakia, Russia and are in the middle range in terms of bad debt rates payment punctuality ranges between 65% and 5% Belgian companies have the lowest proportion of bad debts with only.8% on average Greek and Spanish companies allow long payment terms Both are facing high bad debt rates and Greece also bad payment behavior Proportion of invoices paid punctually in % of total no. of invoices 0 0 60 80 00 Ø Payment terms in days Payment Practices 00 EOS
Survey Analysis Cash Flow Bottlenecks Due to Unpaid Receivables Bad debts cause cash flow problems Eastern European companies suffer more frequently than Western European companies >> Percentage of companies which have experienced cash flow problems in the past due to bad debts and/or delays in payment Romania () % Greece () % Poland () Bulgaria () % % Spain () Slovakia () Russia () 5% 6% % United Kingdom () Belgium () Germany () 9% 0% 0% Payment Practices 00 EOS
Survey Analysis Significance of internal Risk/Receivables Management British, Spanish and Greek companies are most likely to have specialist staff / departments for receivables and credit management [%] 6 5 5 5 9 5 8 6 55 55 5 85 8 65 0 0 Yes Don t know / no comment No Question: In your company, do you have a special department for credit management (receivables/risk management) or employees who deal exclusively with receivables and credit management? This applies to e.g. steps taken during credit assessments and to dealing with unpaid receivables and bad debt losses. 5 Payment Practices 00 EOS
Survey Analysis Trend in the importance of Risk/Receivables Management Greek and Romanian companies are strongly believe in the importance of an increase in receivables management, by a wide margin [%] 0 5 0 8 8 55 5 6 55 9 9 9 58 6 5 5 6 5 6 Increase Decrease Remain the same Don t know / no comment Question: Now please think about the significance of risk and receivables management in your company. Over the next two years, will the importance of these tasks in your company increase, remain the same or decrease? 6 Payment Practices 00 EOS
Survey Analysis Cooperation with External Service Providers German and Belgian companies are most likely to use external service providers 85% of Russian companies with no external support [%] Law firms 6 5 9 0 6 0 Dunning/ debt collection companies 8 9 5 8 5 0 Credit agencies 58 9 6 0 5 0 Bad debt insurance 5 9 6 8 0 5 6 No external service provider 9 0 0 56 6 9 85 Don t know/ No comment 0 8 Question: With which of the following external service providers do you co-operate in the field of credit/receivables management? Please differentiate between business customers and end customers. Payment Practices 00 EOS
Summary Few debts written off in Eastern Europe, better cash flow in Western Europe Value of professional receivables mngt. acknowledged The macroeconomic situation in the countries surveyed corresponds to the results of our survey the vast majority of decision-makers have recognised the value of receivables management under the pressure of the crisis Western companies are doing better than their East European counterparts in avoiding cash flow problems: Only 9 to 0% of German, Great Britain and Belgium companies have experienced cash flow problems because of payment defaults More than 0% of all companies in Eastern Europe were most frequently affected by cash flow problems, in Romania even % East European companies seldom suffer from bad debts: Write off rates range between.8% (Russia) and.% (Poland) of invoice In Slovakia, only 9% of businesses have their own experts The proportion of bad debts in Spain (.%) and Greece (5.0%) is particularly high Professional receivables management is almost taken for granted at Western European companies by both using internal specialists and cooperation with specialist service providers: 5% of British, Greek and Spanish companies employ internal credit and receivables management specialists In Slovakia, only 9% of businesses have own experts Particularly in Germany (89%) and Belgium (8%), companies rely on external support Only % of businesses in Russia work with attorneys or debt collection companies, the figure in Bulgaria is around % and in Slovakia 6% Participated companies evaluate the future development of payment behaviour differently: In Greece over half (5%) of businesses fear a further decline in payment behaviour meanwhile in Great Britain, almost two thirds (6.8%) assume that there will be no change in payment behaviour In Russia, by contrast, one third (%) expects that willingness to pay will improve Well over 5% of all business agree on the assessment of receivables management 8 Payment Practices 00 EOS
Thank you for your time! 9 Payment Practices 00 EOS