EU Mandatory Payment Terms Welcomed by Businesses, Says Atradius StudyBy Atradius N.v., PRNE
Tuesday, October 19, 2010
CARDIFF, Wales, October 20, 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."
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: joanne.aaron at atradius.com .
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