How is payment behaviour developing in Europe? How do European companies respond to the payment habits of their clients? Which Bulgarian companies are increasingly using professional receivables management? International studies commissioned by the EOS Group answer these questions and several others.

Europe: Payment behaviour is stagnant

On average in Europe, one in every four invoices
is not paid by the payment deadline.

Payment deadlines rise across Europe

Typically, what is the payment deadline allowed by your company? (Specify in days)

Europe: ‘There is a lack of urgency’

Businesses are waiting longer for their money.

The payment behaviour in Europe has so far deteriorated slightly in 2016 compared to the previous year (see chart “Europe: Payment behaviour is stagnant”). The positive development observed from 2014 to 2015 has now come to a standstill. Invoices paid on time accounted for 80 per cent on average in Western Europe and 74 per cent in Eastern European countries. In 2015, the values were one percentage point higher in both geographic areas. Most companies do not expect the development to reverse again. These statistics are reported in the EOS Survey ‘European Payment Practices’ 2016, for which the independent market research institute TNS Infratest questioned 3,000 companies in 14 European countries.

Parallel to the stagnating payment behaviour, the payment deadlines companies allow their clients in 2016 have increased in comparison to the previous year (see chart on the left). On average, clients have 36 days, so two more days, to pay their bills. In the UK, companies allow their clients four more days than in 2015 to pay, and in Hungary, it is seven additional days. ‘When we compare the results of last year, we see a link between payment deadlines and payment behaviour,’ says Hans-Werner Scherer, Chairman of the EOS Group’s Board of Directors.

Contrary to the assumption that longer payment periods lead to punctual payments, clients actually appear to delay payment even further. ‘There is a lack of urgency and invoices are being forgotten,’ says Mr Scherer. ‘If this trend in extending the deadlines continues, we expect that the payment behaviour will deteriorate.’

EOS Survey 2016

Bulgaria: More debt sales

Requests for professional receivables management are rising.

Bulgarian companies are placing greater emphasis on professional debt collection from specialist service providers, according to a study from EOS Matrix and the 14 other member companies of the Association of the Collection Agencies in Bulgaria (ACABG). The volume of receivables passed to Bulgarian debt collection services in 2015 rose significantly to approximately one billion euros. In the prior year the volume was approximately 731 million euros. According to those surveyed, the average amount of receivables per capita rose from 248 euros in 2014 to 381 euros in 2015.

‘The reasons for the increase in the volume of outsourced receivables are the higher lending rates and concerns about this year’s planned bank stress test in Bulgaria,’ explains Rayna Mitkova-Todorova, Managing Director of EOS Matrix in Bulgaria and President of ACABG. Therefore, banks handed over more receivables in 2015 to service providers than any other sector. The share of bank receivables accounted for about 60 per cent. ‘The financial institutes want to improve cash flow by using professional debt collection,’ said Ms Mitkova-Todorova. The same reason is behind the upswing in debt sales. In 2014, B2C portfolios valued at some 81 million euros were up for sale. In 2015, this figure tripled to almost 234 million euros.

Bulgarian banks turn to outsourcing receivables

In 2015, 63 per cent of the receivables volume given to debt collection services in Bulgaria was from banks; in 2014, it was only 35 per cent. (Figures in per cent)

Telecommunications companies
Other financial services providers (non-banking)