no. 1182
Special ”Dossier”
Payment periods in Europe:
wide gaps
Euler Hermes Economic Research Department
Economic Outlook
www.eulerhermes.com | no. 1182
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Contents
Special Dossier
n°1182 Payment periods
Payment periods in Europe: wide gaps
Economic Outlook n° 1182 | Special Dossier | Payment periods
Editorial
page 3
page 4
> Overview – The increase in payment periods poses a major risk to European recovery
page
4
page
8
page 8
> First Focus point – A three-speed Europe
page 12
> Second Focus point – What determines payment periods in different sectors?
page
12
• Automobiles and automotive components >The problem for subcontractors
page
14
• Air transport >An instrument of globalisation but marked by regional differences
page
18
• Chemicals >Supplying industries and supporting the industrial fabric via client credit
page
20
• Pharmaceuticals >No cash flow problems
page
22
• IT services > Constrained by their clientele
page
24
• Aeronautic components >Stability in payment periods – sign of a healthy sector
page
25
• Construction >The sector with the greatest disparities
page
26
• Four determinants to note
page
28
• Comparison Germany-France
page
28
page
29
Annexes
page 29
• Annex I
Subsidiaries
page 33
> Law on the Modernisation of the Economy (LME) and sector round tables in France
• Annex II
> Payment defaults in Italy
page
30
• Annex III
> Detailed data, by country
page
31
• Annex IV
> Detailed data, by sector
page
32
Economic Outlook
series
page 35
Le Bulletin Économique du Groupe Euler Hermes is issued ten times a year by the Economic research department of Euler Hermes. It is also available on subscription for
other businesses and organisations. Reproduction is authorised, so long as mention of source is made. o Publication Director and Chief Economist: Ludovic Subran
• Study coordinated by: Virginie Reboul (Economist) • Macroeconomic Research: Maxime Lemerle (Manager), Mahamoud Islam (Economist) • Global Sector Research:
Yann Lacroix (Manager), Bruno Goutard, Marc Livinec, Didier Moizo (Sector Economists) • Country risk Research: David Atkinson (Manager), Andrew Atkinson, Manfred
Stamer (Economists) • Have also contributed to this publication: Romeo Grill (Economist for Germany), Dan North (Economist for the USA), Christian Péchard (Infocenter
Studies Manager), Andrea Pignagnoli (Economist) • Graphic Design: Claire Mabille • Editors: Martine Benhadj • Support: Anne-Marie Bégoc, Valérie Poulain • Translation:
Charles Prager • For further information, contact: the Economic Research Department of Euler Hermes at 1, place des Saisons 92 048 Paris La Défense Cedex – Tel.: +33
(0) 1 84 11 53 77 > Euler Hermes is a limited company with a Directoire and Supervisory Board, with a capital of 14,451,032.64 euros. • Photoengraving: Evreux Compo,
Evreux, France – Permit April 2012—Bull 1176; ISSN 1 162 – 2 881 o 31 May 2012
2
Economic Outlook N° 1182 | Special Dossier | Payment periods
Euler Hermes
Editorial
The harmonisation of payment periods in Europe: a
necessary evil?
lthough the notion of economic convergence seems crucial to the future of the
European Monetary Union, it is threatened by the upheavals being undergone.
The growing gaps in growth, public deficits and current account balances – both in
scale and intensity – demonstrate that the differences between the heart of the
Eurozone and the periphery are here to stay. Creating a common economic policy
that benefits from this heterogeneity and that ultimately transcends it is an essential
task, especially to allay fears over the Eurozone’s very future. The toolbox – of which
the European Financial Stability Facility (EFSF), the European Stability Mechanism
(ESM) and the European Investment Bank (EIB) are parts – strengthens institutional
convergence, but it does not solve the problem of the efficient specialisation of
economies that one would expect. The economic debate, for its part, remains marked
by this indispensable convergence, crystallized by the furious speed required to
return to balanced budgets for 2012 and 2013. Making this adjustment is particularly
hard for the countries of Southern Europe, hit by severe recessions. This study focuses
on a less visible but equally important convergence: that of payment periods between
businesses. By March 2013, under a European Directive, contractual payment periods
in Europe must be set at a maximum of 60 days. Some countries are ready for this,
such as France, while others, such as Germany, already show payment periods well
below 60 days. By contrast, Italy, Spain and Portugal, as well as certain key economic
sectors in some countries, such as construction and IT services, are far from the
European target. On top of this is the deterioration in economic activity in Europe. This
should further amplify these gaps by 2013. Will European SMEs, which create the
growth of the Eurozone, suffer from an overly rapid convergence, one that is
countercyclical and potentially damaging to their cash flows? When you focus in on
the sector level, the differences between client and supplier payment periods are
considerable and at times alarming. In economic policy terms, efforts to support and
increase the competitiveness of the private sector remain little discussed, despite a
marked rise in business insolvencies nearly everywhere in Europe. Discussions over
sovereign debt occupy a great deal of attention, but they do not address the
difficulties facing businesses. However, it is today that we will determine the health of
Europe’s industrial fabric for the future. _Ludovic Subran
A
3
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Overview
The increase in payment periods
poses a major risk
to European recovery
1 Definitions
▶ Contractual payment period > the time period during
which payment should be made according to the provisions
agreed between the client and the supplier (stated in days).
▶ Effective payment period > the time period at the end of
which the payments due as agreed between the client and
the supplier are actually made (stated in days).
▶ Lateness of payment > the time difference between the
contractual payment period and effective payment period.
The sum of the average lateness of payment and the
contractual time yields the effective payment period (stated
in days).
▶ Days’revenue (DR) > unit consensually used to express
payment periods when they are calculated using business
balance sheet data, dividing the amount of client credits or
supplier debts by average daily revenue.
s we near the March 2013 implementation of
the European Directive, B2B payment periods
are now more than ever a core concern. Cash
flow dynamics are always crucial for a business, and
this becomes especially the case at times of economic
crisis and more restricted access to bank or market
finance, during which even more rigorous management of accounts receivable and payable is called for.
A
▶ Client payment period > the average time until collection
by the business of client payments, taking account of the
payment periods agreed by the business. The longer the
delay, the more the business’s cash flows suffer from a lack of
funds.
▶ Supplier payment period > the average time taken by a
business to pay suppliers, taking into account the time
periods agreed with the business. The shorter the payment
period, the more the business’s cash flow suffers from a lack
of funds due to rapid payment.
▶ Tension indicator >the difference between client
payment periods and supplier payment periods (stated in
days).
Source: Euler Hermes
4
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
The importance of payment periods
A microeconomic problem…
Issuing
of invoice
Order
… and an indicator of the business climate
60 days maximum
DateInvoice
d’échéance
date
dedue
la facture
Period defined by the European Directive
> An aggregate calculated for a country or sector that:
– gauges the fluidity of exchanges between
a country’s businesses,
– is a measure of cash flow management vitality,
– has an impact on business climate attractiveness.
Delivery
Source: Euler Hermes
Besides a sharp upturn in the volume of insolvencies,
the end-stage of business difficulties, the crisis and its
many secondary effects have brought a marked deterioration in the quality of B2B payments in Europe.
There have been overall increases in the rate of losses
arising from bad debts, in late payments, and more
broadly in payment periods, while B2B credit is a major
mode of finance across all countries. The current economic and financial climate, marked by a deteriorating
outlook and by increased uncertainty and greater volatility, strengthens the need that much more to monitor and manage the risks associated with the lengthening of these payment periods.
Many data sources exist for measuring and comparing
payment periods, as well as several studies to analyze
developments in inter-company payment. However,
their methodologies vary in terms of the nature of the
data they employ – either using quantitative data
(from national administrative databases, institutes or
surveys), and most often on only an annual basis, or
infra-annually, or – most often – using qualitative data
resulting from samples or surveys. The methodologies
also vary in terms of the scope of their studies, either
in terms of business size (SMEs or large companies) or
time-scope under study (payment periods or only late
payments). As a result, the comparative, studies examine fields of varying scope, with no effective harmonising methodology. Also, these analyses are
mostly descriptive, covering sectoral matters, and
generally do not offer any quantitative forecast. Lastly,
we should note that, by its nature, it remains hard to
summarise the payment period situation for a country or even a sector, given the wide amplitude of payment periods from one business to another.
◾◾◾
2 Legal aspects
To put an end to the problem of late
payments, countries are mobilising.
European Union > European Directive 2011/7 of 16 February
will replace European Directive 2000/35 of 29 June. Member
States must make the changeover by 16 March at the latest. The
main measures of the Directive are:
> establishing a standard payment period of 30 days;
> setting a maximum payment period of 60 days in the absence
of any contractual stipulation setting another payment period
> introduction of penalties in the event of late payment, with
a unit indemnity of 40 euros interest charged on late payment
(reference rates plus 8%).
France > The French Law on the Modernisation of the Economy (LME), France ▶ The French Law on the Modernisation
of the Economy (LME), introduced in 2009, imposes a maximum
payment period of 60 days, 45 days from the end of the
month beginning from date of issue of the invoice. 35 derogations (sector agreements) have allowed businesses that otherwise would have run into severe difficulties to benefit from more
flexible, gradual conditions. On 29 February, France's National
Assembly adopted the proposed bill concerning the simplification
of legislation, which, in particular, provides for the extension of
dispensatory payment periods.
Spain > Spain’s law 15/2010 of July 2010 established a timetable of gradual application of these new payment periods:
> from its entry into force until 31 December, payment periods
were limited to 85 days
> from 1 January 2012 to 31 December, a maximum payment
period of 75 days
> from 1 January, payment periods limited to 60 days
Sources: Ministries of Economy, Finance and Foreign Trade, Official Journal
of the European Union
5
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
◾◾◾
From the literature on the subject and from past
experience, notably during the crisis of winter 20082009 and the emergence from crisis that followed,
three key facts on payment periods in Europe can be
noted:
▶ An economic recovery does not
necessarily imply a shortening in payment
periods.
The crisis has generally necessitated tighter control
over cash flows, with reductions in investment and
optimisation of inventories. However, these have not
been enough to offset the exceptional scale of the
downturn, which has brought increased payment
periods in every country in our study, apart from one
notable exception – France, partly because of legal
changes over this period. At the same time, the rise
in late payments and payment defaults has also
increased perceptions of a lower likelihood of being
paid on time. Conversely, recovery in the economy
does not automatically signify a trend of reduced
payment periods. In the very short term, the recovery
phase of activity can initially be accompanied by an
increase in exposure (accounts receivable and payable) at a faster pace than turnover, which counters
the shortening in payment periods, and it then
requires the growth in activity to accelerate more
than proportionally: France saw no reduction in payment periods in 2010, on annual average. Growth of
0.1%, in our study, implies a change in client payment
periods of between -1.3% and +0.5%.
▶ A rise in late payments increases
insolvencies more than proportionally,
but the obverse is generally not shown.
In 2011, in countries such as Germany and France,
the downtrend in late payment periods was accompanied at the same time by a fall in insolvencies.
However in Belgium and even more in The United
Kingdom, this same trend failed to prevent a rise in
insolvencies. In practice, a relationship between late
payment periods and insolvencies is seen much
more during periods of increasing late payment
periods, which are propitious to a sharp rise in insolvencies.
▶ A favourable legal framework brings
increased attractiveness.
The European Directive will prove an effort for some
countries, for instance in Southern Europe, which
must gradually come into line with the new standards. However, the convergence should in the long
run also allow them to generally reduce their payment risk profiles (all other things being equal), and,
in so doing, increase their attractiveness as international trading partners. France regulates payment
periods through its Law on the Modernisation of the
Economy (LME), introduced in 2009 (see ‘Legal
aspects’p. 5). The French government would like to
further reduce payment periods to 30 days for SMEs
and VSEs. Clearly anticipating the coming European
Directive, Spain’s law of July 2010 (see ‘Legal
aspects’p. 5) sets out a timetable for the gradual
application of these payment periods.
Focus on France
The legal framework and the effect of the LME
6%
-20%
Introduction
of the LME
▶ The case of France
It is notably thanks to the LME and the
-15%
4%
-10%
2%
-5%
anticipation of its coming into force that
French businesses improved payment
periods and their volatility, an important
point to the extent that they use four
times as much inter-business credit
0
0
-5%
-2%
-10%
and 100 billion euros respectively), with
accounts payable accounting for
between 25% and 30% of the total
balance sheet of French businesses.
-4%
-15%
-20%
-6%
98
00
02
04
06
08
Growth (left axis)
Client payment periods (left axis)
Inverse growth in insolvencies (right axis)
6
than bank credit (at around 400 billion
Source: Euler Hermes
10
12
In 2009 payment periods fell by 3% and
insolvencies rose by 12% (against +15%
in 2008).
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
The aim of this study is to provide a comparative
analysis between countries (our first focus point)
and between sectors (second focus point) for client
and for supplier payment periods in Europe. The
major findings of our study are summarised below:
> In 2013, a general, but limited, improvement in
payment periods in Europe.
The outlook for positive growth in 2013 will allow an
automatic improvement in payment period practices,
but this will not be enough to meet the target.
1
2 European sectors: 4 groups.
The slowing of efforts seen starting in
2009 confirms the existence of three
dynamics in at work in Europe.
In this initial analysis, using the BACH database (a
European database on non-financial firms issued by
the Bank of France), we studied the course of payment
periods for several European countries over the period
2000-2010 (available balance sheets). We next offer
a prospective view of payment periods for 2012-2013
using Euler Hermes data, which will highlight the
magnitude of the efforts that need to be made. The
indicators of change and of cash flow tensions generated put the accent on the changes and the trends
in payment behaviour more than on the length of payment periods, and best reflect the risks of worsening
cash flows that are already under pressure.
> There is a clear disparity between the countries of
Northern and Southern Europe that risks widening
over the very short term (2012), in the current economic environment, and this will mean greater
efforts to be made, especially for countries in
Southern Europe.
The gaps by country. We can distinguish in fact ‘three
Europes’: Germany and Poland, both of whom show
payment periods shorter than the 60 days set out in
the European Directive and displaying very low cash
flow tension indicators; Belgium and France with payment periods close to 60 days; and Spain, Italy and
Portugal, all of which saw significant increases in payment periods in 2009 and will have to make considerable efforts to meet the 60-day standard.
> The outlook for 2012 is for an accentuation of the
gaps between countries and therefore of the efforts
to be made.
In 2012, payment periods should mirror economic
developments. With an outlook for positive growth,
payment periods for businesses in Poland and
Germany should normally shorten by an average of 2%
and 0.5% respectively. For France and Belgium, with
growth forecast to be below potential, payment
periods will increase by 0.5%. By contrast, the countries
most in difficulty, such as Spain, Italy and Portugal,
should see an increase in payment periods, taking
them further away from the 60-day target before
16 March.
In a second analysis, we employ the Euler Hermes
database for a closer examination of European business sectors, over a greater number of countries. We
focus on eight key sectors.
> Gaps between sectors will persist, driven by the
difficult economic situation and by still unequal
negotiating strengths.
There is a clear gap between sectors within a given
country and between countries in a given sector. The
ranking of sectors (by length of payment periods)
remain fairly similar from country to country. However,
in Southern Europe, the sectoral differences are four to
five times greater than in Northern Europe. Our eight
sectors break down into four groups: (1) air transport
and automobiles, with concentrated suppliers and
clients who pay quickly; (2) pharmaceuticals, chemicals and automotive components, with average payment periods since they are widely present in the economy, and aeronautic component suppliers; (3) IT
services, where unequal bargaining power is the rule;
and (4) construction, with domestically-based suppliers and clients. ▣
▶ Areas of analysis
> For the first analysis:
Countries: Germany, Belgium, Spain, France,
Poland, Italy and Portugal
All sizes of businesses
Period: 2000-2010
> For the second analysis:
Countries: Germany, Belgium, Spain, France,
Italy, United Kingdom, United States, Denmark,
Norway, and Sweden.
All sizes of businesses
Period: 2006-2010
Business sectors
Sector
Division
Automobiles
Automotive components
Chemicals
Pharmaceuticals
Air transport
Aeronautic components
Construction
IT services
34
62
72
NACE Code 1
34.1 to 34.3
28.4
4.1, 24.2, 24.3, 24.5, 24.6, 24.7
24.4
62.1 and 62.2
35.3
45.2 and 45.4
72.1 to 72.6
7
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
First
Focus point
A three-speed Europe
Diverging developments in
the face of the economic climate
and the European Directive
This analysis highlights clear differences in
payment behaviour that comes as no revelation,
given the warning sounded in June 2000 with the
initial publication by the European Commission of
its Directive to combat late B2B payments.
However, with the targets not being met, on
16 February the Commission proposed a new
European Directive to allow long-term genuine
harmonisation within the EU. By 16 March 2013
this Directive has to be enter into law in all Member
States. Our following account of 2000-2010 and
our forecasts thus do not capture the legislative
impact in Spain (July 2010) and in the European
Union (March 2013).
Looking forward on the basis of macroeconomic
forecasts suggests only a weak convergence by
2013 (the target date of the European Directive
being 16 March), after an intervening increase in
payment period gaps in 2012 due primarily to the
weakness in the economy.
8
▶ Sectoral gaps 4 to 5 times bigger in
Southern Europe than in Northern
Europe.
> Italy and Spain show large disparities
between sectors: with a national average
of 79 days for client payment periods,
Spain has payment periods ranging
between 174 days in the construction
sector to only 48 days in the automotive
sector, a difference of 126 days.
> German businesses posted average
client payment periods of 24 days in 2010,
with small variation (31 days), depending
on the sector.
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
At the end of 2010, on the eve of the
European Directive coming into force,
payment periods in different countries
were highly disparate, both in duration
and in trend, and particularly worse in
countries in Southern Europe.
The relatively high level of Belgium’s cash flow tension indicator means that businesses there must pay
special attention to cash flow management.
We can see that the indicators of change in payment
terms in France were the only improvements in 2009.
Initially fairly close to that in Southern Europe, French
payment behaviour has approached that of Northern
Europe, thanks notably to the implementation of the
LME and also that to the importance of its trade with
Germany, where payment periods are short.
The levels of payment periods in France and Belgium
enable them to anticipate the implementation of the
European Directive with a certain vigilant calm.
▶ Germany and Poland already largely within the
standards
We see Germany and Poland already well below the
60-day standard set by the European Directive. The
two countries are distinguished by their strict
enforcement of late payment penalties. They show a
negative change indicator, reflecting a steady
improvement in payment behaviour. At 24
days’revenue on average in 2010, client payment
periods for German businesses fell by 21% between
2000 and 2010. Poland showed average payment
periods of 45 days’revenue in 2010, the same as in
2005.
▶ Southern Europe at the back
With longer contractual payment periods, Spain
introduced its 10 July 2010 law to gradually reduce
payment periods to conform to the European
Directive by 1 January. However, like Portugal and
Italy, countries in Southern Europe are suffering in
the economic climate and display payment periods
well above the norm, rising to between 80 and 100
days since 2009. At 116 days’turnover, payment
periods in Italy are the longest of these.
◾◾◾
▶ France and Belgium in the middle
Belgium and France neared the 60-day standard over
the decade. After falling by 10% since 2000, the time,
client payment periods in France stood at 61 days in
2010. This was largely due to anticipation of the 60day maximum LME standard and its implementation.
The average payment period masks major differences between countries
Amplitude*
150
ES
120
IT
90
60
FR
GB
BE
30
SE
DE
NO
DK
0
20
50
80
Length of payment periods
Source: Euler Hermes
110
* The difference between the sector posting the longest payment periods in the country and the sector with the shortest payment periods in the country.
Panel of sectors: automobiles, automotive components, pharmaceuticals, chemicals, air transport, aeronautic components, construction and IT services.
9
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
An outlook of lengthening payment periods…
… driven by a worsened economic environment
+ 0.5 %
- 1.5 %
- 0.5 %
-1%
-2%
- 2.5 %
+ 0.5 %
+1%
+0%
+ 1.5 %
+ 2.5 %
+ 0.5 %
+2%
0%
Value 1: Change in payment periods from 2011 to 2012
Value 2: Change in payment periods from 2012 to 2013
◾◾◾
Looking forward: widening disparities,
major efforts to be made, too rapid and
perhaps inopportune?
Using the econometric relationship between
changes in payment periods and the economic
environment, we expect a lengthening of payment
periods. This is without taking into account the
potential positive effect of anticipations of the
Directive coming into force.
In the countries of Northern Europe, relations between businesses and banks allow banks to commit
providing borrowers with the funds to pay suppliers within contractual deadlines. In France and
Southern Europe, by contrast, a system of supplier
credit applies, which makes meeting contractual
deadlines more difficult.
Source: Euler Hermes
payment periods will continue to improve, dropping
by 0.5% in the former. In Poland, they should shorten by 2%, in negative correlation with its 3% growth
rate.
▶ Positive momentum in France (due to the LME);
but in Belgium, by contrast, economic setbacks will
be more determining.
With growth forecast at 0.3% in France and 0.2% in
Belgium – in both cases below their growth potential – the two countries will see a slight 0.5% increase
in payment periods. In 2013, while B2B payment
periods are likely to continue rising by a further 1% in
France, these times should shorten by 1.5% in Belgium
We may expect slightly less rigorous payment discipline and a certain degree of confidence among
French businesses, possibly due to their use of credit
insurance.
▶ Germany and Poland: small-scale reduction and ▶ Southern European countries, hit hard by the crinearly no contribution to the economic environment.
Both countries have been rigorous, with payment
periods – already shorter than required under the
European Directive – and they are continuing their
efforts.
In 2012, both countries by our forecasts will enjoy
growth – at 1% in Germany and 3% in Poland – and
10
sis, will struggle to attain the targets.
Payment periods in Spain, Portugal and Italy should
increase in 2012. We forecast a natural growth in
payment periods in these countries, with a 2.5%
increase in Spain and a 2% increase in Italy, doing
nothing to help them meet the European Directive.
Economic Outlook n° 1182 | Special Dossier | Payment periods
Cash flow pressures should increase.
From 2007 to 2008, we have seen an evident intensification of cash flow tensions in Portugal and Italy,
already at high levels.
Increased cash flow tensions force businesses to find
other sources of finance. By contrast, in Poland a
nearly zero cash flow requirement (1 day) underlines
tight cash flow management. Spain, for its part, has
escaped the cash flow scissors effect suffered in
other Southern European countries only thanks to
supplier payment periods being nearly as long as
client payment periods.
Despite showing acceptable cash flow requirements,
businesses in France and Belgium should pay close
attention to cash flow management.
Euler Hermes
The new European Directive should prove difficult to implement by 2013, especially in
Southern European countries, and could in the
short term impact on the number of insolvencies
and weaken the industrial fabric, although in the
long term it could have a beneficial effect for
these same countries. ▣
Cash flow: Tension Indicator
In 2013, the prospects for growth are better than in
2012 and suggest a positive influence on B2B payment periods. However, this should be of limited
scale in Southern European countries, necessitating
major efforts there to meet the targets of the
European Directive.
Forecasts
30
25
20
15
Forecast
of economic growth and insolvencies in 2013
Belgium
10
Germany
Spain
Country
Growth
France
Insolvencies
Germany
Q
+ 1%
q
- 1%
Poland
Q
+ 3%
Q
+ 11%
Belgium
Q
+ 0.2%
Q
+ 10%
France
Q
+0.3%
Q
+ 4%
Spain
q
- 1.8%
Q
+ 20%
Italy
q
- 1.8%
Q
+ 24%
Portugal
q
- 3%
Q
+ 29%
5
Italy
Poland
Portugal
0
00 01 02 03 04 05 06 07 08 09 10 11 12 13
Sources: Euler Hermes calculations, BACH database
Source: Euler Hermes
Scale of the efforts to be made
Change in client payment periods
Change in supplier payment periods
Days’ revenue
Days’ revenue
Forecast
120
120
Forecast
100
100
Effort to be made
80
80
60
60
Effort to be made
Belgium
Germany
40
Spain
Belgium
Germany
40
Spain
France
France
Italy
20
Poland
Italy
20
Poland
Portugal
Portugal
EU Directive
0
00 01 02 03 04 05 06 07 08 09 10 11 12 13
Sources: Euler Hermes calculations, BACH database
EU Directive
0
00 01 02 03 04 05 06 07 08 09 10 11 12 13
Sources: Euler Hermes calculations, BACH database
11
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Second
Focus point
What determines
payment periods
in the different sectors?
Group 4
150
Construction
120
Group 2
90
60
Group 3
Pharmaceuticals Automotive
e
components
t
ts
Group 1
▶ The sector of activity effect is by contrast less
IT services
Aeronautic **
components
Chemicals
Automobiles
30
Air transport
0
10
40
Length of payment periods
80
100
* The difference between the country posting the longest payment periods for the sector and the country with the shortest
payment periods for the sector.
Panel of countries: Germany, Belgium, Spain, France, Italy, United Kingdom, Sweden, Denmark and Norway
** Excluding Spain
Source: Euler Hermes
12
▶ Unequal bargaining power is a well-know fact
of life for SMEs dealing with very large enterprises,
and it is a structural disadvantage for them.
Major enterprises use their bargaining power,
weakening SMES, in order to win shorter client
payment periods and longer supplier payment
periods. This becomes more acute during periods
of crisis, during which room for manoeuvre
(access to finance) is more greatly reduced for the
smallest firms.
A fairly marked axis of sector internationalisation
Amplitude**
The national data studied in the first part of this
study does reflect the overall trends in a country,
but not the differences in the particular situations
related, for example, to business size or business
sector.
well known, but the disparities are great and are
intrinsically linked to the very nature of the activity
of businesses in the sector, due either to the sales
cycle (e.g., toys and chocolate), the production
cycle (longer in public works, shorter in foods),
or to the sector’s positioning (the absence of client
payment periods in major retail distributors).
This second part of our study will highlight other
sectors that also show these disparities.
Economic Outlook n° 1182 | Special Dossier | Payment periods
he longest payment periods are seen in nearly
all countries in the construction and IT services
sectors. The automotive sector in most countries
has the least need of B2B credit. In Spain and France,
there is a difference of around 60 days between the
automotive sector and IT services, while the difference
is 65 days in Italy, only 30 days in Germany, and 20 days
in the United Kingdom. Over the period we examine,
we see a general convergence between payment
periods, limiting cash flow requirements.
T
We can distinguish four groups of sectors that present payment periods that are similar in level and
amplitude.
Group 1
▶ Among automakers, we see a relative convergence between client payment periods and supplier
payment periods, generating some cash flow surpluses, with the prize going to Italy, which is converging towards the other countries studied with client
payment periods at 37 days, but which shows record
supplier payment periods at 75 days.
▶ In air transport, payment periods are overall well
respected. While these have been cut by 18% in Italy,
they have however exploded in Spain, lengthening by
52%. For the other countries, payment periods generally are between 20 and 40 days.
Group 2
▶ In France, sector round tables have helped subcontractors to even out client and supplier payment
periods. These have shortened by 21%, to 54 days for
client payment periods and 53 days for supplier payment periods. In the United Kingdom, however, while
supplier payment periods are down by 30% to 41 days,
client payment periods have dropped by only 12% to
68 days, generating a heavy cash flow requirement of
26 days. Germany continues to show rapid payments,
with client payment periods of 36 days and supplier
payment periods of 24 days. Italy for its part has the slowest payments, with 111 days for client payment
periods and 96 days for supplier payments. Roughly
speaking, payment periods in Italy are twice as long
as in France and three times as long as in Germany!
▶ With global suppliers, the chemicals and pharmaceuticals sectors show a limited difference in payment periods. The chemicals sector made great
Euler Hermes
efforts after the abrupt slump in activity of 2008-2009,
achieving average client payment periods of 65 days
in 2010. Particularly great efforts were made in Spain,
where businesses have cut payment periods by 30%
since 2006. Our study of the sector also shows big differences: Italy and Spain allow long client payment
periods, at 93 days and 67 days respectively, while they
pay their suppliers at 63 days and 46 days respectively,
creating significant cash flow requirements.
This becomes even worse in the pharmaceutical sector,
in both cases with cash flow requirements at 50 days.
Large cash flow needs are also generated in Germany,
with client payment periods of 46 days, which seem
long given that supplier payment periods are 29 days. In
the other countries in our study, we see a relative
convergence of client and supplier payment periods
within reasonable limits from 30 days to less than 60
days.
▶ In the aeronautics components sector, payment
periods are generally steady at between 20 and 60
days, with the notable exception of Spain where they
are unusually long.
Group 3
▶ In IT services, key clients impose longer payment
periods on suppliers in the sector, which shows fairly
long payment periods generally, particularly in client
payment periods, which are nearly 50 days in Germany
and the United Kingdom, 95 days in France, 101 days in
Italy and 107 days in Spain. The long client payment
periods and the far shorter supplier payment periods
(generally between 20 and 60 days), which are falling
apart from in France (+3% to 51 days) and in Spain
(+14% to 61 days) generates significant cash flow needs
within the sector and creates genuine financial fragility.
Group 4
▶ The highly locally based construction sector sees
payment periods lengthen when the economic climate worsens, making it the sector where we see the
biggest differences. A prime example is Spain, where
supplier payment periods have reacted a record 157
days (and where the sector has massively suffered). By
contrast, in the United Kingdom client payment periods
are 33 days. It must be noted that the convergence
toward similar payments in these countries will take a
great deal of time. ▣
13
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Automobiles and
automotive components:
the problem for subcontractors
Relations between subcontractors and their clients
have been difficult for a long time. Major
contractors enjoy unchallenged bargaining
strength, benefiting from their powerful positions
to the detriment of their subcontractors and
imposing very long payment periods.
We note that the automotive components sector in
France (number two in Europe, behind Germany)
accounts for more than 40% of subcontracting in
the country.
Acceptable payment periods in the
automotive sector.
This is the sector with the shortest client payment
periods (at 37 days on average), proof of the cooperation between major contractors and subcontractors, notably in Northern Europe. With the implementation of industry round tables in France, the
sector is working to harmonise payment periods in
order to avoid harming subcontractors. A very good
example is automotive components, with supplier
payment periods of 53 days.
With supplier payment periods longer than client
payment periods, the automotive sector shows cash
flow surpluses of varying sizes, depending on the
country. However the countries where these surpluses are the biggest are those where supplier payment periods are much longer than average.
We can distinguish two different groups of countries
in the auto sector.
▶ The good students of Northern Europe.
At the top of the class are Germany and the United
Kingdom, with client payment periods of 22 and 31
days’revenue respectively, and supplier payment
14
periods of 34 days in both cases. The cash flow surpluses in 2010 were the equivalent of 13 days’revenue in Germany and 3 days’revenue in The United
Kingdom.
In France there was a sharp fall in payment periods in
2007, followed by very sharp fall in 2008, when client
payment periods dropped to 32 days and supplier
payment periods fell to 41 days, in anticipation of the
implementation of LME.
However, 2009 saw a clear lengthening in payment
periods, with client payment periods increasing by
50%. This was a response to the crisis by automakers
to support their concessionaires, the latter heavily
burdened with stocks of unsold vehicles.
In 2010, payment periods shortened again, dropping
to 41 days for client payment periods and 49 days for
supplier payment periods, thanks to good cash flow
management, showing an 8-day surplus.
▶ The countries in Southern Europe as well as
Belgium are drawing on supplier credit.
The countries in Southern Europe as well as Belgium
are drawing on supplier credit to ensure a positive
cash flow to offset their weak cash flows or low shareholders’equity.
Italy shows a significant cash flow surplus, generated
by very long supplier payment periods (at 75 days,
more than twice as long as in Germany). At the same
time, client payment periods there are 37 days, within
the European average, generating a very large positive cash flow for Italian automakers.
The European Directive, whose aim is to reduce and
control payment periods (to a maximum of 60 days)
will therefore be hard to implement in Italy in this
sector.
◾◾◾
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Client payment periods: automobiles
Client payment periods in days’ revenue, 2010
60
US
42
50
NO
IT
BEL
45
37
41
ES
48
FR
41
DK
40
GB
31
40
30
DE
21
SE
19
20
10
Change
0
-110%
-60%
-10% 0%
10%
40%
60%
Supplier payment periods in days’ revenue, 2010
Supplier payment periods: automobiles
100
US
79
IT
75
90
BE
69
80
ES
56
70
FR
50
60
DK
45
50
DE
34
40
NO
47
30
SE
37
20
GB
34
10
Change
0
-100%
-50%
0%
50%
100%
Source: Euler Hermes
Indicator of change in client payment periods: automobiles
Cash flow Tension Indicator: automobiles
20
50
40
10
30
0
20
10
-10
0
-20
-10
France
France
-30
Germany
Germany
-20
Spain
Spain
Italy
-30
Italy
-40
United Kingdom
United Kingdom
Belgium
Belgium
-40
2007
2008
2009
-50
2010
Source: Euler Hermes
2006
2007
2008
2009
2010
Source: Euler Hermes
Client and supplier payment period gap: automobiles
22
Italy
0
16
Belgium
4
3
Spain
11
-3
France
5
United Kingdom
-19
Germany
-19
-5
-25 20
-15
-15
-10
-5
0
5
10
15
20
25
Client payment period difference from average of 37 days
Supplier payment period difference from average of 53 days
Source: Euler Hermes
15
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
◾◾◾
Automotive component makers
and SMEs in the face of the large
automakers: what negotiating
power do subcontractors have?
▶ The scissors effect between client payment
periods and supplier payment periods, with subcontractors coming out the losers, is a direct result of the
power of automakers over their subcontractor suppliers.
In France, given the many problems encountered by
subcontractors, measures were adopted through a
code of good practice of client/supplier relations for
subcontracting in the auto sector (see Annex I).
in a significant increase in working capital requirements.
▶ In Italy, the cash flow requirements are 14 days,
with the longest client payment periods in Europe
(110 days, twice as long as in France and three times
longer than in Germany), offsetting once again very
long supplier payment periods, at 96 days’revenue.
Italy has not implemented a code of good practice
that could, as in France, considerably improve relations between major contractors and subcontractors.
We note in the case of Italy an evident financial fragility when it comes to implementing the new
European Directive on payment periods.
With its highly structured business sectors, Germany
has no need to implement codes of good practice.
▶ For the auto components industry in France, there ▶ Cyclical factors: for major contractors, purchasing
has been a clear improvement in payment periods.
Indeed, client payment periods in the industry had
been rising consistently after 2000, to 110 days in
2004 (source: Euler Hermes).
The application of the code of good practice, combined with the introduction of the LME, obliged automakers to move to payment periods compatible with
supplier payment periods. We thus saw a proportional contraction in payment periods in 2010, to 54
days for client payment periods and to 53 days for
supplier payment periods, helping subcontractors to
maintain low cash flow requirements.
In Germany, while payment periods are the shortest,
the cash flow requirements are however higher than
in France.
▶ In Spain and in the United Kingdom, there is a scissors effect between client payment periods (83 days
and 68 days respectively) and supplier payment
periods (52 days and 41 days respectively), resulting
16
operations should, with recovery, bring value added,
as subcontractors should produce equivalent or
more innovative quality at a lower cost; extreme
concentration among suppliers makes negotiations
difficult or even simply unlikely to bear fruit.
▶ Structural factors: with client payment periods
down by half in 2010 to 54 days’revenue, the auto
components industry in France has been one of the
major beneficiaries of the June 2006 signature of the
code of good practice.
In order to adapt to the new European Directive
coming into force in March 2013, Italy will have to
make the greatest efforts to shorten payment
periods, and this will not only be a real challenge, but
also will pose risks to business cash flows. ▣
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Client payment periods in days’ revenue, 2010
Client payment periods: automotive components
ES
83
100
90
IT
111
GB
68
80
70
BE
67
FR
54
SE
51
60
NO
40
50
40
DK
55
30
DE
36
20
10
Change
0
-150%
-100%
-50%
0%
50%
100%
Supplier payment periods: automotive components
Supplier payment periods in days’ revenue, 2010
120
IT
96
100
80
ES
52
FR
53
GB
41
60
BE
49
53
40
DE
36
DK
20
SE
39
20
NO
27
Change
0
-100%
-50%
0%
50%
100%
Source: Euler Hermes
Indicator of change in client payment periods:
automotive components
Cash flow Tension Indicator:
automotive components
120
60
100
50
80
40
60
30
40
20
20
0
10
-20
France
France
Germany
-40
Germany
0
Spain
Spain
Italy
-60
Italy
-10
United Kingdom
United Kingdom
Belgium
Belgium
-80
-20
2007
2008
2009
2010
Source: Euler Hermes
2006
2007
2008
2009
2010
Source: Euler Hermes
Client and supplier payment period gap:
automotive components
44
Italy
41
-1
Spain
13
-4
-3
Belgium
-11
United Kingdom
-2
0
France
Germany -34
-16
-28
-40 -30
-20
-10
0
10
20
30
40
50
Client payment period difference from average of 37 days
Client payment period difference from average of 37 days
Source: Euler Hermes
17
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Air transport: an instrument
of globalisation but marked
by regional differences
The air transport sector in our studies is comprised
of passenger transport and airfreight traffic.
From the data we can observe a number of sectoral
and regional characteristics.
Relatively short payment periods
in air transport compared to other
sectors.
▶ Two factors explain this feature, for example on
accounts receivable
> The passenger segment (78% of turnover in the
sector worldwide in 2011) is a B2C (business-toconsumer) activity, and, due to a high proportion of
payments being made prior to travel, does not generate significant accounts receivables in airline
accounts.
> Freight transport is subject to legally mandatory
payment periods of no more than 30 days (legal
constraints).
Also note that when carriers buy their aircraft, this is
carried out through medium to long-term financing
which allows them to make staged payments to aeronautics constructors during the course of the production of aircraft and then finalise payment once
the aircraft are delivered.
▶ Client payment periods structurally longer in
Europe (44 days’revenue) than in the United States
(22 days).
This is due to two fundamentally different economic models. The major United States airlines, following the difficulties encountered in the previous
decade, have clearly refocused on the passenger segment and heavily reduced (or abandoned) related
activities, to the benefit of domestic or foreign specialist operators. This nearly ‘pure player’strategy of
the United States companies, looking to concentrate
their resources to optimise their core business,
stands in contrast to the broader operational portfo18
lios of their European counterparts. Of the latter, the
major players can, to varying degrees, shelter operations as diverse as passenger traffic (a minimum
75% of turnover) as well as freight, maintenance (to
other airlines, in addition to their own fleets), catering and IT services. This (highly relative) diversification is part of a very different economic model –
one designed in order to, among other things, ‘saturate’the use of their existing infrastructure (generally
very costly material assets) via diverse operations,
and in order to ensure good maintenance of sensitive equipment, as well as to integrate activities that
are less cyclical and/or new avenues of profitability.
This partial orientation towards buoying B2B activities automatically translates into lengthened payment periods for the airlines’accounts receivable.
▶ During the 2008-2009 crisis, very substantial
fluctuations in accounts payable in the United
States (from 46 days in 2008 to 29 days in 2009);
less in Europe (from 35 days’revenue in 2009 to 38
days in 2009).
In a widespread context of falling activity, inherently
stemming from the world economic downturn, the
difference of magnitude in these two markets can be
explained by the concomitant variations in oil prices.
We have to remember the crucial impact of kerosene
prices at that time on the fortunes of airlines. Indeed,
fuel prices account for 30% to 35% of their operating
costs and thus a significant share of their accounts
payable. In face of the sector’s intrinsic exposure to
this factor, different choices were made on opposite
sides of the Atlantic. European carriers, for their part,
chose to use financial instruments to cover a generally
large part of their fuel purchases, which explains the
relative stability – or more correctly the more limited
scale – of the changes their accounts payable, despite
the turbulence in oil (and thus jet fuel) prices. In the
United States, by contrast, financial cover was
undertaken far less – or in cases not at all – being
deemed too expensive, and supplies were obtained
on spot markets, thus explaining the size of American
businesses’accounts payable following the course of
oil prices.
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Client payment periods in days’ revenue, 2010
Client payment periods: air transport
60
50
FR
44
ES
34
40
DE
29
IT
29
30
US
21
GB
17
20
10
0
-50%
Change
-40%
-30%
-20%
-10%
0%
10%
Supplier payment periods: air transport
Supplier payment periods in days’ revenue, 2010
80
ES
62
IT
58
70
60
FR
44
50
DE
31
40
GB
25
US
22
30
20
10
Change
0
-30%
-20%
Source: Euler Hermes
-10%
0%
10%
20%
30%
Indicator of change in client payment periods: air transport
40%
50%
60%
70%
Cash flow Tension Indicator: air transport
100
20
15
80
10
60
5
0
40
-5
20
-10
0
France
Germany
Spain
-20
United States
United Kingdom
-40
2007
2008
2009
2010
Source: Euler Hermes
-15
France
-20
Spain
-25
United States
Germany
Italy
United Kingdom
-30
2006
2007
2008
2009
2010
Source: Euler Hermes
Since then, the strategies have evolved, with
European
companies
generally
having
reconsidered the extent and especially the duration
of their cover operations.
▶ A North-South divide in Europe.
The air transport sector reflects the characteristics
of a country’s domestic economic environment,
and hence is no exception to showing longer payment periods in the south of Europe than in the
north. Thus, supplier payment periods are 25
days’revenue in the United Kingdom, 31 days in
Germany, 44 days in France, 58 days in Italy and 63
days in Spain. ▣
19
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Chemicals: supplying industries
and supporting the industrial fabric
via client credit
Between 2003 and 2005, the chemicals sector
went through the bottom of a cycle. It followed this
with large-scale restructuring among operators
that at times disrupted output flows. In 2009, the
sector suffered the impact of the abrupt economic
slowdown on its clientele, especially in the auto
and construction sectors. This gave way to the
appearance of input bottlenecks that in turn
brought an increase in payment periods in the
chemicals sectors of nearly every country.
A limited variation in payment
periods.
▶ Generally, one can say that enormous efforts were
made in the chemicals sector to manage cash flow
requirements. It was rather as if the violent downturn
in activity experienced in 2008-2009 convinced
operators to set right the way they were financing
their operational cycles in order to not (or no longer)
undergo the horrid consequences of suddenly
running out of cash.
The improvement in managing cash flow
requirements in the French chemicals sector has
been genuine. The sector’s cash flow requirements of
8 days’revenue seems the lowest in Europe after The
United Kingdom (3 days). With client payment
periods falling by 8% in 2008 and supplier payment
periods by 12%, the French chemical industry has
come out well, notwithstanding a slight increase in
payment periods in 2009. In 2010, payment periods
dropped below 60 days, with client payment periods
of 58.7 days’revenue and supplier payment periods at
50.9 days, or a total shrinkage of payment periods of
11% between 2006 and 2010.
▶ With shorter client and supplier payment periods
and lower cash flow requirements than in other
countries, the chemicals sector in the United Kingdom
20
shows once again a stable and effective management
of operating requirements. The income on cash of the
good performers in the sector is surely the result of a
strategy aimed at cementing the loyalty of their clients
and suppliers via long payment periods for their
customers and a determination to pay their suppliers
relatively quickly.
▶ We should note the singular efforts made by Spain
in its policy of cutting payment periods within its
chemicals sector. Compared to 2006, when client
payment periods were 95 days, Spanish businesses
have reduced the figure by 30%. Payment behaviour
in Belgium is close to that of France: reasonable
payment periods and good cash flow management.
Norway operates within the logic of an integrated
sector, well managing its payment periods and cash
flows. Indeed, despite a slight increase in payment
periods in 2009, the figures are still good, with client
payment periods of 40 days and supplier payment
periods of 31 days, and cash flow requirements of 9
days.
▶ Italy’s heavy cash flow deficits directly result from
its very long client payment periods, even despite
their shortening by 8% since 2006. At 93 days, these
are well beyond the limits of the European Directive
entering into force in March 2013.
▶ In the United States, the chemical industry pays its
suppliers an average of 40 days after invoices are
issued and gets paid by its clients with a payment
period on average equal to 61 days’revenue, resulting
in cash flow requirements of 20 days’revenue. ▣
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Client payment periods in days’ revenue, 2010
Client payment periods: chemicals
80
ES
67
IT
93
FR
59
70
DK
57
US
61
BE
58
Change
60
DE
46
NO
40
50
SE
32
GB
30
40
30
20
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Supplier payment periods: chemicals
Supplier payment periods in days’ revenue, 2010
80
IT
63
70
Change
60
ES
46
FR
51
50
40
BE
47
30
NO
31
DE
29
SE
24
US
41
GB
28
DK
29
20
10
0
-15%
-10%
-5%
0%
5%
10%
15%
20%
Source: Euler Hermes
Indicateur Indicator of change in client payment periods: chemicals
20
Cash flow Tension Indicator: chemicals
50
15
40
10
5
30
0
France
Germany
-5
France
20
Germany
Spain
-10
Italy
United States
United States
Belgium
-15
Spain
Italy
10
Belgium
United Kingdom
United Kingdom
Norway
-20
2007
2008
2009
Norway
0
2010
Source: Euler Hermes
2006
2007
2008
2009
2010
Source: Euler Hermes
Client and supplier payment period gap: chemicals
25
Italy
44
7
Spain
18
8
10
Belgium
12
10
France
-9
Germany
United Kingdom
-30
-2
-11
-18
-20
-10
0
10
20
30
40
50
Client payment period difference from average of 37 days
Supplier payment period difference from average of 53 days
Source: Euler Hermes
21
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Pharmaceuticals:
no cash flow problems
Supplier payment periods seem generally shorter
than client payment periods in the
pharmaceuticals industry. Depending on the
country, however, we see an uneven picture in how
payment periods are developing. The
laboratories’advantage of enjoying comfortable
cash flow surpluses from their operations resides in
their ability to pay their suppliers more quickly and
thus benefit from financial discounts. This is more
profitable than placing their funds at low rates of
interest.
In France the rate of non-payment and insolvencies
in the chemicals sector overall is markedly higher
than in the pharmaceuticals segment.
▶ Payment periods are well below 60 days in the
sector in the United Kingdom, Germany and
Denmark. The very short payments benefiting their
suppliers, which even occasion cash flow requirements in Germany and Denmark, is a means of
consolidating their ties with their partners, allowing
them to benefit from, among other things, financial
discounts.
▶ By contrast, in Spain (-50), Italy (-50) and in the
United States (-55), the industry suffers from a harmful scissors effect. The length of payment periods that
businesses grant their customers is very generous,
when it is not the result of (as in Spain) the financial
woes of their hospital clientele. Unlike in the United
States, however, Spain and Italy are not relaxing their
22
efforts to attempt to shorten payment periods (-11%
and -6% since 2006 for client payment periods in
Spain and Italy respectively, compared to +49% in the
United States).
▶ Cash flow management by United States pharmaceutical companies seems notwithstanding driven by a more aggressive commercial policy.
Lengthening clients’payment periods is also a way of
reinforcing their loyalty and helping them to avoid
difficult bank lending conditions – in sum, the expression of a policy more financial than industrial in
nature on the part of the United States pharmaceuticals sector. The length of these payment periods,
which continue to grow, does put the United States
at the bottom of the class in this sector in terms of the
length of payment periods and of efforts made to
attempt reducing them (client payment periods up
by 49% and supplier payment periods up by 43%).
▶ Apart from a rebound in payment periods in 2009,
the French pharmaceutical industry, fifth in the rankings, is not letting up on its efforts to shorten them.
In 2010, these were down by 10 days against 2006,
with cash flow needs of 14 days’revenue, well below
the figure for Germany (30 days), Spain (49 days),
Italy (50 days) the United States (55 days) and
Denmark (14 days). Committed to cutting average
payment periods, the pharmaceuticals sector in
Frances does not benefit however from the advantage it gains by obtaining discounts in return for rapid
payment to its suppliers. ▣
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Client payment periods: pharmaceuticals
IT
90
Client payment periods in days’ revenue, 2010
120
ES
85
100
US
93
BE
63
FR
66
80
Change
60
GB
36
DK
38
NO
25
40
DE
46
SE
11
20
0
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
Supplier payment periods: pharmaceuticals
Supplier payment periods in days’ revenue, 2010
70
Change
60
BE
54
FR
52
50
40
GB
31
IT
40
30
DK
20
NO
16
20
US
38
ES
35
DE
16
SE
11
10
0
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Source: Euler Hermes
Indicator of change in client payment periods: pharmaceuticals
Cash flow Tension Indicator: pharmaceuticals
30
80
25
70
20
15
60
10
50
5
0
40
-5
France
-10
30
France
Germany
Germany
-15
Spain
Spain
20
Italy
Italy
-20
United Sates
-25
United Kingdom
United States
10
United Kingdom
Denmark
Denmark
-30
2007
Source: Euler Hermes
2008
2009
2010
0
2006
2007
2008
2009
2010
Source: Euler Hermes
23
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
IT services:
constrained by their clientele
▶ In France, despite the LME and a strong response
Major clients have the strong suit in their
negotiations with IT services providers, resulting
for the latter in large cash flow requirements that
weaken businesses in the sector. Indeed, this is the
sector hit hardest by the weight of its accounts
receivable. As a result, it faces a large or very large
scissors effect in every country apart from Sweden.
Moreover, we see rigidity to a reduction in client
payment periods.
by the sector to cut these payment periods by 7% from
2006, client payment periods remain long, due to
major public sector customers. On the supplier side,
by contrast, little advance can be expected, inasmuch
as their purchases consist of intellectual services paid
for on a monthly basis, and materials that are already
paid for quickly in order to improve margins.
▶ Germany for its part is seeing a reversal in its cash
flow tension indicator that risks harming businesses
in the sector. Supplier payment periods are down only
slightly, as the initial payment periods were shorter
and there is a sharp separation between IT services
and IT equipment in the country, unlike in France. The
9% increase in client payment periods reflects
weakness in demand, but Germany’s payment
periods remain among the shortest in the sector in
Europe.
▶ Our study reveals very long client payment periods,
but supplier payment periods that are reasonably
good, or even low in some countries. The scissors
effect in very big in every country, but with a more
muted impact in Germany, the United Kingdom,
Belgium and Sweden.
Major clients have the advantage
of the stronger position in
negotiations, resulting in large
cash flow requirements that
weaken businesses in the sector.
▶ The pronounced deterioration in the situation for
businesses in the sector in the United States, and the
more moderate one for those in the United Kingdom
and Belgium, is due primarily to an only small decline
in supplier payment periods and to weak demand. ▣
Client and supplier payment period gap: IT services
Cash flow Tension Indicator: IT services
80
17
Spain
70
30
16
Italy
24
60
7
France
19
50
15
Belgium
7
France
40
-18
Germany
Germany
-24
Spain
United Kingdom
-21
Italy
30
-27
-30
-20
-10
0
10
Client payment period difference from average of 37 days
Supplier payment period difference from average of 53 days
Source: Euler Hermes
24
20
30
United State
United Kingdom
40
Belgium
20
2006
2007
Source: Euler Hermes
2008
2009
2010
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Aeronautic components:
stability in payment periods –
sign of a healthy sector
level of concentration among aeronautics constructors both in Europe and the United States, whose
levels of activity set the tone for subcontracting. At
the end of the chain, civil aviation constructors (business or commercial aircraft, essentially in the zones
examined) benefit from advances paid by the airlines
ordering aircraft, staged from the signing of contracts
until delivery, in order to finance the production cycle
(with very high inventories and exposure). Moreover,
at times there are payments on account, higher upstream in the chain, helping to ease cash flows.
With the notable exception of
Spain, the last three years have
seen relative stability in payment
periods.
▶ France, however, seems to show the impact of the
entry into force of the LME, with supplier payment
periods falling from 77 days in 2008 to 49 days in
2010, while in the United States, 2008 reflected the
destabilisation in the sector brought about by the
long strike at Boeing. This overall resistance, in the
face of the difficult economic situation that affected
all industrial sectors, is the sign of the excellent health
of the commercial aviation sector, buoyed by nearly
constantly increasing production, by contrast with
business aviation, which was seriously affected by falling production and order books over the same
period.
▶ Not contradicting the distinction between
Northern and Southern Europe, already well demonstrated in many sectors, and despite the convergence
in the sector towards a restricted number of customers, the longest payment periods are in Italy (with
Client payment periods: aeronautic components
200
Client payment periods in days’ revenue, 2010
▶ What sets this sector apart is the extremely high
supplier payment periods of 60 days’revenue in
2010) and especially Spain (131 days in 2010). This
situation is grounded in local practices but is also
clearly due to the domestic economic environment
– particularly in the case of the big lengthening in
Spain, where supplier payment periods doubled between 2008 and 2010. Operators in both these countries are thus exposed to penalising consequences
from the approaching application of the European
Directive. ▣
ES
153
150
100
US
67
FR
65
IT
67
GB
40
50
DE
20
Change
0
-30%
-10%
10%
30%
50%
Source: Euler Hermes
Supplier payment periods: aeronautic components
ES
131
160
Supplier payment periods in days’ revenue, 2010
The sample on which we base our conclusions in
this study is drawn for civil and military aeronautics
activities in the different countries examined.
140
120
100
80
IT
60
FR
49
60
DE
51
GB
44
40
US
42
20
Change
0
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Source: Euler Hermes
25
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Construction: the sector
with the greatest disparities
Payment periods in large part reflect the particular
economic environment of the country in question.
This is a domestic sector in with
exceptional payment periods in
some countries.
> In France, the sector benefits from derogation in
payment periods.
Nonetheless, efforts are needed to shorten payment
periods. In fact, on 14 February, the then Minister in
charge of consumption, Frédéric Lefebvre, announced an intensification of monitoring measures in
order to reduce payment periods deemed to be too
long. In 2012, the sector is supposed to begin posting
payment periods within the LME norms (45 days
from the end of the month or 60 days from the
invoice date). However, according to the Minister, the
reality is quite different, with payment periods running between 76 and 92 days. The then government
wanted to introduce an amendment to the legislation that would allow entrepreneurs to suspend work
in the event of late payments on intermediate instalment invoices, the aim being to end the growing
number of cases of the law being circumvented. Even
though the effects of the LME and derogation agreements are impacting on payment periods, it is hard
in this sector to reduce client payment periods due to
the nature of the clientele (individuals, the State and
state-owned enterprises in the sector). By our estimates, this impacts negatively on businesses in the
sector.
> In Germany, the strict application of late payment
penalties allows a better result than does the LME as it
is applied in France. As a result, payment periods are
half as long as they are for French businesses in the
sector. We see a coordinated reduction in payment
periods and in cash flow requirements in the German
construction market, now lacklustre primarily for
demographic reasons.
26
> Late payments are frequent in Spain, despite
already long contractual payment periods, and only a
small scaling back of extremely long client payment
periods has been achieved, by around only half as
much (-10%) as was achieved in Germany (-16%).
> In Italy, the construction sector is made up of many
businesses with low shareholders’capital, and the
weakness in demand has translated into long
payment periods and a sharp increase in cash flow
requirements.
> In the United Kingdom, public intervention helped
sustain activity in the construction sector but acted to
slow the reduction in client payment periods. The
United Kingdom shows a relatively coordinated
reduction in payment periods, at close to the average.
> In Belgium, businesses in the building and civil
engineering sector are unable to meet the client
payment periods imposed by the authorities, holding
back reductions in supplier payment periods in
response. Government authorities and especially
local authorities pay very late, a trend that is
accentuating.
> In the United States, we see an increase in supplier
payment periods (+18%), due to a fall in demand and
the large number of residences for sale. Client
payment periods have also risen considerably (+46%)
in this extremely poor market environment, on top of
which it is also difficult for prices of new-build housing
to rise. ▣
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Client payment periods in days’ revenue, 2010
Client payment periods: construction
ES
174
200
IT
127
150
FR
87
BE
82
100
DK
57
DE
41
50
SE
47
US
53
GB
33
NO
63
Change
0
-10%
-20%
0%
10%
20%
30%
40%
50%
Supplier payment periods in days’ revenue, 2010
Supplier payment periods: construction
200
ES
157
150
IT
114
100
BE
70
FR
57
GB
38
50
SE
27
DK
38
US
43
NO
33
DE
28
Change
0
-80%
-60%
-40%
-20%
0%
20%
Source: Euler Hermes
Indicator of change in client payment periods: construction
Cash flow Tension Indicator: construction
40
25
35
20
30
15
25
10
20
5
15
0
10
France
France
-5
Germany
5
Germany
0
Italy
Spain
Spain
-10
Italy
United States
United States
-15
United Kingdom
Belgium
-20
2007
2008
2009
2010
Source: Euler Hermes
-5
United Kingdom
Belgium
-10
2006
2007
2008
2009
2010
Source: Euler Hermes
Client and supplier payment period gap: construction
Spain
109
113
Italy
66
66
Belgium
22
21
9
France
26
-20
-20
Germany
United Kingdom
-10
-28
-40
-20
0
20
40
60
80
100
120
140
Client payment period difference from average of 37 days
Supplier payment period difference from average of 53 days
Source: Euler Hermes
27
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Four determinants
to note
▶ There are four determining factors
explaining these disparities between sectors:
> 1. The organisation of the sectors themselves, an example being the
round table in the automotive components sector in France, which
enabled subcontractors to even out client and supplier payment
periods.
> 2. When the suppliers are global, sectors such as chemicals benefit
from a limited variation in payment periods.
Comparison between
Germany-France
> 3. The health of the sector, an example being the construction sector in Spain, which shows the difficulties undergone because of the
crisis.
> 4. The negotiating strength of big clients and big suppliers who
impose longer payment periods, such as in the IT services sector.
55
60
80
IT services
Construction
Aeronautic
components
Pharmaceuticals
Chemicals
National
average
Automotive
components
Automobiles
Air transport
Source: Euler Hermes
28
IT services
35
France
40 days
Construction
Air transport
15 days
Automotive
components
National
average
Aeronautic
components
Automobiles
Germany
Chemicals
Pharmaceuticals
▶ Payment periods by sector
100
Economic Outlook n° 1182 | Special Dossier | Payment periods
Annexes
Annex I
▶ Law on the Modernisation of the Economy
(LME) and sector round tables in France
Round tables in the automotive components sector
In France: the code of good practice of28 June 2006 allows for balanced and more lasting and harmonious client/supplier relations through the sector, where the client must:
> send a late payment penalty without the supplier having to request it
> not alter the payment term for reasons not set out in the contract (notably arising from internal failings in its administrative departments)
> furnish a means of payment that can be mobilised or financed to the supplier who requests it and do
so within 20 days of receiving the invoice, in the absence of any litigation
LME in pharmaceuticals
Following the implementation of the LME of 2008
in France, subject to the decree of 22 September,
trade associations representing French pharmacies signed an accord with the trade association of
French pharmaceutical manufacturers (LEEM) to
be applied gradually to payments for non-prescription drugs, which account for 10% of the pharmaceuticals market.
According to the AFIPA, the trade body that represents the self-medication medicines industry,
payment periods for non-prescription medicines
were much longer than for other medicines, running from 180 days to 360 days for seasonal products (e.g., winter remedies and anti-allergy
drugs).
In France: under a derogation for non-prescription drugs, the payment periods agreed by the
parties to settle invoices due may not exceed:
> 90 days from invoice date for 2009
> 70 days from invoice date for 2010
> 60 days from invoice date from 1 January.
These payment periods run from the date of issue
of the invoice.
Agreement on payment periods of 27 January: additional to the code of good practice for payment
periods:
> the payment period between clients and subcontractors is cut to a maximum of 90 days effective 1 September
Client businesses in the sector with turnover in excess of 300 million euros will give an additional reduction in payment periods of 30 days to suppliers with turnover of less than 50 million euros, according
to the following modalities: maximum payment periods of 75 days effective 1 September and of 60 days
effective 1 September.
LME construction
In France: under derogation in the construction and
civil engineering sector, the parties agree the following maximum payment periods:
> 70 days from end of month effective 1 January
> 60 days from end of month effective 1 January
> 50 days from end of month effective 1 January
> 45 days from end of month effective 1 January
The 35 derogations of the LME
> toys; DIY; watches and jewellery; construction and civil engineering; plumbing, heating and electrical equipment; book publishing; stationery and office supplies; tyres; metal packaging closures and metal tins for food; optional non-reimbursable prescription
drugs; sales of pets, products and accessories for pets; two or three-wheeled motorised
and quad bikes; boating; amateur gardening; industrial equipment and hardware; agricultural supplies; agricultural equipment; paints, inks, colours, glues and adhesives; optical spectacles; cooperage; sporting goods; print industry; music CDs and DVDs; amateur fishing; arts and crafts; leather; steel products for construction; recreational vehicles; marine and inland aquaculture; food supplements; roundwood logs and standing
timber; wholesaling of automotive tools; hunting arms and ammunition; textiles and
clothing.
29
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Annex II
▶ Payment defaults in Italy
A close examination of payment defaults of Italian
businesses reveals great disparities between
regions and sectors via two key indicators: the rate
of non-payment and the severity (average
amount) of missed payments.
On the domestic market, the victims of the crisis in
consumption, of international competition (e.g.,
footwear) or of the rise in energy prices (e.g., paper
manufacturing) saw default amounts increase.
Chemicals also saw a rise in these amounts.
Exports, a key element in the Italian economy in 2011,
now are a matter of great concern over the rate of
payment defaults in industry, agriculture, foods,
chemicals and mechanical engineering.
Italy’s strong exports to troubled economies such as
Spain, Greece and Portugal have a considerable
impact on the severity of non-payments. We also see
an increase in the average payment default amount in
the steel, footwear and construction sectors.
Regional disparities are increasing in the crisis: the
south and centre of Italy are more exposed to liquidity
problems during economic slowdowns. In the north
of the country, in Piedmont and Liguria, show a
sustained trend of increasing rate (depending on the
production specialisation in these regions, i.e.,
automobiles and naval industries). In central and
southern regions, the trend deteriorates more quickly,
with some diverging trends for certain regions like
Molise and Calabria, which are just improving after a
deep crisis. ▣
Italy Domestic market – 2007 to March 2012 trend
Italy Export market – 2007 to March 2012 trend
(basis, 2007 = 100)
(basis, 2007 = 100)
200
150
150
120
100
90
50
60
Rate
Rate
Amount
0
2008
2009
Source: Euler Hermes
30
Amount
2010
2011
2012* Q1
30
2008
2009
Source: Euler Hermes
2010
2011
2012* Q1
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Annexe III
▶ Detailed data, by country
Germany
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
France
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Spain
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Portugal
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Client
payment
period
30
27.3
26.6
26.1
25.5
25.3
25.4
25.2
22.6
23.4
23.7
23.5
23.3
23.1
Supplier
payment
period
21.6
19.7
19.2
19.0
18.9
18.7
18
18.5
16.7
17.1
18.5
18.5
18.5
18.5
Client
payment period
growth indicator
Supplier
payment period
growth indicator
-9%
-2.4%
-1.8%
-2.2%
-1%
0.5%
-0.8%
-10.2%
3.6%
1%
-1%
-0.5%
-1%
-8.9%
-2.6%
-0.8%
-0.8%
-0.9%
-3.8%
2.6%
-9.5%
2.5%
7.9%
0%
0%
0%
Client Supplier
payment payment
period
period
68.0
58.3
64.5
56.2
63.2
55.1
62.4
54.3
61.2
54.0
63.3
55.3
63.4
55.5
63.2
55.8
63.1
53.2
60.7
51.1
61.4
52.4
62
53.2
62.3
53.2
62.9
53.8
Client
payment period
growth indicator
Client Supplier
payment payment
period
period
69.6
64.2
69.5
64.2
70.6
64.6
69.2
64.7
69.8
64.8
71.2
67.0
71.5
67.4
73.5
69.5
70.6
66.9
80.9
75.3
79.0
75.3
78.3
74.8
80.2
76.3
80.6
76.6
Client
payment period
growth indicator
Client Supplier
payment payment
period
period
68.3
51.6
71.4
53.8
69.6
53.7
70.9
55.3
70.1
55.4
69.0
54.8
76.4
64.4
76.8
64.8
72.7
61
79.8
65.3
81.7
66.3
82.3
66
83.6
65.4
83.6
65.4
Client
payment period
growth indicator
-5.1%
-2.0%
-1.2%
-2.0%
3.4%
0.3%
-0.3%
-0.2%
-3.7%
1.1%
0.9%
0.5%
1%
-0.1%
1.5%
-1.9%
0.8%
2%
0.4%
2.9%
-3.9%
14.6%
-2.4%
-0.9%
2.5%
0.5%
4.6%
-2.6%
1.8%
-1%
-1.6%
10.8%
0.4%
-5.3%
9.8%
2.3%
0.8%
1.5%
0%
Supplier
payment period
growth indicator
-3.6%
-2.0%
-1.5%
-0.6%
2.5%
0.3%
0.7%
-4.7%
-4.1%
2.6%
1.6%
0%
1%
Supplier
payment period
growth indicator
0%
0.7%
0.1%
0.2%
3.3%
0.6%
3.1%
-3.8%
12.6%
0%
-0.8%
2%
0.5%
Supplier
payment period
growth indicator
4.4%
-0.2%
3%
0.1%
-1.2%
17.6%
0.6%
-5.8%
6.9%
1.6%
-0.4%
-1.0%
0%
Cash flow
tension
indicator
8.3
7.6
7.4
7.1
6.7
6.6
7.4
6.7
5.9
6.3
5.2
5
4.9
4.6
Poland
Cash flow
tension
indicator
9.6
8.3
8.1
8.2
7.2
8
8
7.4
9.9
9.7
9
8.7
9
9.1
Belgium
Cash flow
tension
indicator
5.3
5.3
5.9
4.5
4.9
4.2
4.1
4
3.8
5.6
3.6
3.5
4
4
Italy
2005
2006
2007
2008
2009
2010
2011
2012
2013
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Client Supplier
payment payment
period
period
45.4
45.3
45.6
44.6
44.5
43.7
43.7
43.3
44.3
44.1
45.3
44.9
44.1
43.3
43.2
42.3
42.1
41.1
Client
payment period
growth indicator
Client Supplier
payment payment
period
period
69.8
56.9
67.3
54.4
64
43.7
67,8
53.8
72.1
58.2
65.9
53.5
64.3
51.8
65.5
51.8
60.7
47.3
64.8
51.8
63.2
52.2
61.6
50.7
61.6
50.7
60.7
49.8
Client
payment period
growth indicator
Client Supplier
payment payment
period
period
105.9
85.7
102.7
81.9
106.1
83.3
105.2
82.6
102.4
82.2
104.5
83.8
102.8
81.2
100.8
80.8
99.6
77.2
106.8
82.5
105.9
82.3
105.3
81.8
107.4
83.5
107.4
83.5
Client
payment period
growth indicator
0.4%
-2.3%
-1.8%
1.3%
2.3%
-2.7%
-2.0%
-2.5%
-3.6%
-4.8%
5.9%
6.5%
-8.6%
-2.5%
2%
-7.3%
6.7%
-2.5%
-2.5%
0%
-1.5%
-3%
3.3%
-0.9%
-2.7%
2.1%
-1.7%
-1.9%
-1.2%
7.2%
-0.8%
-0.6%
2%
0%
Supplier
payment period
growth indicator
-1.4%
-2.2%
-0.9%
2.0%
1.8%
-3.7%
-2.3%
-2.7%
Supplier
payment period
growth indicator
-4.3%
-19.6%
23.1%
8.1%
-8.1%
-3.2%
0%
-8.7%
9.4%
0.9%
-2.9%
0%
-1.8%
Supplier
payment period
growth indicator
-4.5%
1.8%
-0.9%
-0.5%
2%
-3.2%
-0.5%
-4.4%
6.9%
-0.3%
-0.5%
2%
0%
Cash flow
tension
indicator
0.1
0.9
0.9
0.4
0.1
0.4
0.8
0.9
1
Cash flow
tension
indicator
12.9
12.8
20.3
13.9
13.9
12.4
12.5
13.7
13.4
13
11
10.9
10.9
10.9
Cash flow
tension
indicator
20.2
20.8
22.8
22.6
20.2
20.7
21.6
20
22.4
24.2
23.7
23.5
24
24
Cash flow
tension
indicator
16.7
17.6
15.9
15.5
14.7
14.2
12.0
12.0
11.7
14.6
15.4
16.3
18.2
18.2
Source: Euler Hermes
31
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Annexe IV
▶ Detailed data, by sector
Automobiles
Client Supplier
payment payment
period
period
France
41
50
Germany
21
34
Spain
48
56
Italy
37
75
United States
42
79
United Kingdom 31
34
Belgium
41
69
Denmark
40
45
Norway
45
47
19
37
Sweden
Client
payment period
growth indicator
1%
14%
-27%
-12%
-97%
56%
-6%
10%
-23%
-47%
Chemicals
Client Supplier
payment payment
period period
France
59
51
Germany
46
29
Spain
67
46
Italy
93
63
61
41
United States
United Kingdom 30
28
Belgium
58
47
Denmark
57
29
Norway
40
31
Sweden
32
24
Client
payment period
growth indicator
-11%
-3%
-30%
-8%
22%
-15%
14%
11%
1%
-7%
Construction
Supplier
payment
period
57
28
157
114
43
38
70
38
33
27
Client
payment period
growth indicator
-6%
-16%
-10%
-1%
46%
-2%
-10%
-11%
-10%
-5%
Client Supplier
payment payment
period period
France
44
44
Germany
29
31
Spain
34
62
Italy
29
58
United States
21
22
United Kingdom 17
25
Belgium
51
49
Denmark
15
23
Norway
21
19
Sweden
12
17
Client
payment period
growth indicator
-2%
2%
-45%
-35%
5%
-29%
47%
-13%
-19%
-31%
Client
payment
period
France
87
Germany
41
Spain
174
Italy
127
United States
53
United Kingdom 33
Belgium
82
Denmark
57
Norway
63
Sweden
47
Air
transport
Cash flow
tension
indicator
-8
-13
-8
-38
-37
-3
-28
-5
-2
-18
Automotive
components
Client Supplier
payment payment
period period
France
54
53
Germany
36
24
Spain
83
52
111
96
Italy
United Kingdom 68
41
Belgium
67
49
Denmark
55
20
40
27
Norway
Sweden
51
39
Client
payment period
growth indicator
-21%
0%
-18%
3%
-12%
-17%
-2%
-33%
-26%
Supplier
payment period
growth indicator
-21%
-4%
2%
-2%
-30%
-14%
-5%
-14%
-9%
Cash flow
tension
indicator
2
12
31
14
26
18
35
13
12
Cash flow
tension
indicator
8
17
21
30
20
3
12
28
9
8
Pharmaceuticals Client
Supplier
payment payment
period period
France
66
52
Germany
46
16
Spain
85
35
Italy
90
40
93
38
United States
United Kingdom 36
31
Belgium
63
54
Denmark
38
20
Norway
25
16
Sweden
11
11
Client
payment period
growth indicator
-13%
41%
-11%
-6%
49%
-1%
12%
2%
16%
31%
Supplier
payment period
growth indicator
-16%
-10%
18%
-15%
43%
7%
7%
4%
-11%
25%
Cash flow
tension
indicator
14
30
50
50
55
5
9
18
9
0
Supplier
payment period
growth indicator
-18%
-19%
-3%
-6%
18%
-10%
-13%
-9%
-21%
6%
Cash flow
tension
indicator
30
13
17
13
11
-5
12
19
30
21
IT services
Client Supplier
payment payment
period period
France
95
51
Germany
52
25
Spain
107
61
Italy
101
60
United States
72
21
United Kingdom 50
23
Belgium
84
58
Denmark
54
26
Norway
64
25
Sweden
33
23
Client
payment period
growth indicator
-7%
9%
-14%
-2%
16%
0%
-4%
-17%
-8%
-5%
Supplier
payment period
growth indicator
3%
-8%
14%
-5%
-10%
-12%
-10%
5%
-3%
-7%
Cash flow
tension
indicatorr
44
27
46
41
51
27
25
28
39
9
Supplier
payment period
growth indicator
8%
14%
51%
-16%
5%
43%
12%
-17%
-30%
-6%
Cash flow
tension
indicator
1
-2
-29
-30
-1
-8
3
-8
2
-5
Aeronautic
components
Client
payment period
growth indicator
-5%
-21%
8%
-22%
42%
-12%
Supplier
payment period
growth indicator
-14%
37%
-17%
-31%
-15%
5%
Cash flow
tension
indicator
16
-32
22
2
25
-4
Supplier
payment period
growth indicator
-12%
45%
10%
-4%
-86%
26%
27%
33%
10%
15%
Supplier
payment period
growth indicator
-8%
1%
-1%
-9%
16%
10%
7%
12%
4%
-9%
Client Supplier
payment payment
period period
France
65
49
Germany
20
51
Spain
153
131
Italy
62
60
United States
67
42
United Kingdom 40
44
Note: client payment period, supplier payment period and cash flow tension indicator are for 2010; client and supplier period growth indicators are for 2006-2010.
Source: Euler Hermes
32
Economic Outlook n° 1182 | Special
Special Dossier
Dossier||Payment
Paymentperiods
periods
Euler Hermes
Subsidiaries
Euler Hermes
Registred office: Euler Hermes Group
1, Place des Saisons
92 048 Paris La Défense CEDEX
France
Tel.: + 33 (0) 1 84 11 53 77
Fax: + 33 (0) 1 84 11 54 87
www.eulerhermes.com
Euler Hermes Collections GmbH
Zeppelinstr. 48
14471 Potsdam
Tel.: +49 331 27890-000
Greece
Euler Hermes Emporiki SA
16 Laodikias Street & 1-3 Nymfeou Street
115 28 Athens
Tel.: + 30 210 69 00 000
> Hong Kong
Euler Hermes Hong Kong Services Ltd
Suites 403-11, 4/F
Cityplaza 4
12 Taikoo Wan Road - Island East
Hong Kong
Av. Corrientes 299 - 2° Piso
> China
Euler Hermes Shanghai Information
Consulting Co., Ltd.
C1043AAC CABA, Buenos Aires
Unit 2103, Taipint Finance Tower,
> Argentina
Euler Hermes Argentina S.A.
Tel.: + 54 11 4320 7157/77
Tel.: + 852 2867 0061
N°488 Middle Yincheng Road, Pudong
> Hungary
Euler Hermes Europe S. A
Magyarrorszagi Fioktelepe
New Area, Shanghai, 200120
Kiscelli u. 104
> Australia
Euler Hermes Australia Pty Ltd
Tel.: + 86 21 6030 5900
Level 9, Forecourt Building
2 Market Street
> Colombia
Euler Hermes Colombia
Sydney, NSW 2000
Calle 72 6-44 Piso 3
Tel.: + 61 2 8258 5108
Édificio APA
4th Floor, Voltas House
Bogota
23, j N Heredia Marg
> Austria
Prisma Kreditversicherungs-AG
Tel.: +571 326 4640
Himmelpfortgasse 29
> Czech Republic
Euler Hermes Europe S.A.
organizacni slozka
1010 Vienne
Tel.: + 43 5 01 02-0
Euler Hermes Collections GmvH
Zweigniederlassung Österreich
Handelskai 388
1020 Vienna
Tel.: + 43 1 90 81 771
> Bahrain
Please contact United Arab Emirates
> Belgium
Euler Hermes Europe S.A. (N.V.)
Avenue des Arts—Kunstlaan, 56
1000 Bruxelles
Tel.: + 32 2 289 31 11
> Brazil
Euler Hermes Seguros de Crédito S.A.
Avenida Paulista, 2,421—3° andar
jardim Paulista
São Paulo/SP 01311-300
Tel.: + 55 11 3065 2260
> Canada
Euler Hermes Services Canada, Inc.
1155, René-Lévesque Blvd West
Suite 1702
Montreal (Québec) H3B 3Z7
Tel.: + 514 876 9656
> Chile
Euler Hermes Seguro de Crédito S.A.
Ave. Presidente Kennedy 5735
Of. 801, Torre Poniente
Las Condes
Santiago
Tel.: + 56 2 246 1786
1037 Budapest
Tel.: +36 1 453 9000
> India
Euler Hermes India Pvt. Ltd
Ballard Estate
Mumbai 400 001
Molákova 576/11
186 00 Prague 8
Tel.: + 420 266 109 511
> Demmark
Euler Hermes Danmark, filiale de
filial af Euler Hermes Europe SA Belgien
Amerika Plads 19
2 100 Copenhague O
Tel.: + 45 88 333 388
> Estonia
Please contact Finland
> Finland
Euler Hermes Europe S.A.
Suomen sivuliike
Mannerheimintie 105
Tel.: + 91 22 6623 2525
> Indonesia
PT Asuransi Allianz Utama Indonesia
SSummitmas II. Building, 9th floor
jl. jenderal Sudirman Kav 61-62
jakarta 12190
Tel.: +62 21 252 2470 ext. 6100
> Ireland
Euler Hermes Ireland
The Arch
Blackrock Business Park
Carysfort Avenue
Blackrock
Co. Dublin
Tel.: + 353 1 200 0400
> Israël
ICIC
00280 Helsinki
2, Shenkar Street
Tel.: + 358 10 850 8500
68010 Tel Aviv
Tel.: +97 23 796 2444
> France
Euler Hermes France SA
Euler Hermes Collection
Euler Hermes World Agency
1, place des Saisons
F-92048 Paris-La-Défense Cedex
Tel.: +33 1 8411 5050
> Germany
Euler Hermes Deutschland AG
Euler Hermes Rating Deutschland AG
Friedensallee 254
22763 Hamburg
Tel.: +49 40 8834 0
Federal Export Credit Guarantees
Friedensallee 254
22763 Hamburg
Tel.: +49 40 8834 9000
> Italy
Euler Hermes Europe S.A.
Rappresentanza per l’Italia
Via Raffaello Matarazzo, 19
00139 Rome
Tel.: + 39 06 87001
> japan
Euler Hermes Deutschland AG,
japan Branch
Kyobashi Nisshoku Bldg. 7th floor
8-7, Kyobashi, 1-chome,
Chuo-Ku
Tokyo 104-0031
Tel.: + 81 3 35 38 5403
> Kuwait
Please contact United Arab Emirates
33
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
> Latvia
Please contact Poland
> Russia
Euler Hermes Credit Management OOO
> Tunisia
Please contact Italy
Office C08, 4-th Dobryninskiy per., 8,
> Lithuania
Please contact Poland
Tel.: + 7 495 98128 33 ext.4000
> Malaysia
Please contact Singapore
> Saudi Arabia
Please contact United Arab Emirates
Moscou, 119049
> Turkey
Euler Hermes Turkiye
Iz Plaza Giz Ayazağa Yolu
Eski Büyükdere Cad. No: 9 Kat: 14
Maslak/Istanbul
Tel.: + 90 212 290 76 10
> Mexico
Euler Hermes Seguro de Crédito S.A.
> Singapour
Euler Hermes Singapore Services Pte Ltd
Blvd. Manuel Avila Camacho #164, 8° piso
3 Temasek Avenue
Col. Lomas de Barrilaco
# 03-02 Centennial Tower
> United Arab Emirates
Euler Hermes
c/o Alliance Insurance Co (PSC)
Deleg. Miguel Hidalgo
Singapour 039190
Warba Center 4th Floor
Mexico DF CP 11010
Tel.: + 65 6297 8802
Office 405
Dubai
> Morocco
Euler Hermes Acmar
> Slovakia
Euler Hermes Europe SA, poboka poist’ovne z
ineho clenskeho statu
37, bd Abdelatiff Ben Kaddour
Plynárenská 1
20 050 Casablanca
82109 Bratislava
Tel.: + 212 5 22 79 03 30
Tel.: + 421 2 582 80 911
Tel.: + 52 55 5201 7900
PO Box 183957
Tel.: + 971 4 211 6005
> United Kingdom
Euler Hermes UK
1 Canada Square
Londres E14 5DX
> The Netherlands
Euler Hermes Kredietverzekering NV
> South Africa
Please contact Italy
Pettelaarpark 20
5216 PD’s-Hertogenbosch
Tel.: + 31 73 688 99 99
> South Korea
Euler Hermes Credit Underwriters HK Ltd.
Korea Liaison Office
Tel.: + 44 20 7 512 9333
> United States
Euler Hermes North America
Insurance Company
800 Red Brook Boulevard
> New Zealand
Euler Hermes New Zealand Ltd.
Rm 1411, 14/F, Sayong - Platinum Bldg
Owings Mills, MD 21117
156, Cheokseon-dong,
Tel.: + 1 410 753 0753
Level 1, 152 Fanshawe Street
Chongro-ku,
Auckland 1010
Seoul 110 052,
Tel.: + 64 9 354 2995
Tel.: + 82 2 733 8813
> Norway
Euler Hermes Norge
Holbergsgate 21
> Spain
Euler Hermes Crédito,
Sucursal en España de Euler Hermes SFAC, S.A.
P.O. Box 6875
Paseo de la Castellana, 95
St. Olavs Plass
Planta 14
0130 Oslo
Edificio Torre Europa
Tel.: + 47 23 25 6000
28046 Madrid
Euler Hermes UMA Inc.
(trade debt collection)
600 South 7th Street
Louisville, KY 40201-1672
Tel.: +1 800 237 9386
> Vietnam
Please contact Singapore
Tel.: + 34 91 417 77 67
> Oman
Please contact United Arab Emirates
> Philippines
Please contact Singapore
> Poland
Towarzystwo Ubezpieczen Euler Hermes S.A.
ul. Domaniewska 50 B
02-672 Warsaw
Tél.: + 48 22 363 6363
> Portugal
COSEC - Companhia de Seguro de Créditos, S.A.
Avenida da República, nº 58
1069-057 Lisbon
Tel.: + 351 21 791 3700
> Qatar
Please contact United Arab Emirates
> Romania
Euler Hermes Europe SA Bruxelles
Sucursala Bucuresti
Str. Petru Maior Nr.6
Sector 1
011264 Bucarest
Tel.: + 40 21 302 0300
> Sri Lanka
Please contact Singapore
> Sweden
Euler Hermes Sverige filial
Klarabergsviadukten 90
P.O. Box 729
111 64 Stockholm
Tel.: + 46 8 55 51 36 00
> Switzerland
Euler Hermes Deutschland AG,
Zweigniederlassung Zürich
Tödistrasse 65
8002 Zürich
Tel.: + 41 44 283 65 65
Euler Hermes Reinsurance
Tödistrasse 65
8002 ZürichTel.: + 41 44 283 65 85
> Taiwan
Please contact Hong Kong
> Thailand
Allianz C.P. General Insurance Co., Ltd
323 United Center Building, 30 th Floor
Silom Road.
Bangrak, Bangkok 10500
Tel. + 66 2638 9000
34
Subsidiaries
Registered office: Euler Hermes Group
1, Place des Saisons
92 048 Paris La Défense CEDEX
France
Tel.: + 33 (0) 1 84 11 53 77
Fax: + 33 (0) 1 84 11 54 87
www.eulerhermes.com
Economic Outlook n° 1182 | Special Dossier | Payment periods
Euler Hermes
Economic Outlook
series…
N° 1170
> Special Dossier
Rebound in worldtrade in 2010 confirms the shift already underway before the crisis.
N° 1171
> Business Insolvency Worldwide
The fall ininsolvencies is confirmed, but on a modest scale and in uneven fashion.
N° 1172
> Global Macroeconomic Review
In the face of slowdowns and turbulence, world economic recovery is going through tumultuous times.
N° 1173
> Global Sectors Review
Global economic recovery continues, but new threats are arising.
N° 1174
> Business insolvency in France (only available in French)
The decline ininsolvencies remains modest overall and stillvery uneven, with a high number of cases.
The French economic environment - the slowdown continues.
N° 1175
> Global Macroeconomic Perspectives
The slowdown is confirmed, the weaknesses remain, the risks endure.
N° 1176
> Special Dossier
Green Economy.
N° 1177-1178 > Macroeconomic, Risk and Insolvency Outlook
On the edge.
N° 1179
> Global Sectors Review
Looking for growth where it can be found.
N° 1180
> Business insolvency in France (only available in French)
The overall decrease in French insolvencies hides several weaknesses.
N° 1181
> Macroeconomic, Risk and Insolvency Outlook
A fog cannot be dispelled by a fan.
N° 1182
> Special Dossier
Payment periods in Europe: wide gaps
To come:
N° 1183-84
> Macroeconomic, Risk and Insolvency Outlook
35
njoncture internationale et risques pays
e ralentissement se confirme,
es faiblesses demeurent,
es risques persistent
www.eulerhermes.com
Euler Hermes Economic Outlook is published quaterly
by the Economic Research Department of Euler Hermes
1, place des Saison, 92048 Paris La Défense Cedex - Tel. : +33 (0) 1 84 11 53 77
This document reflects the opinion of the Economic Research Department of Euler Hermes.
The information, analyses and forecasts contained herein are based on the Department's current hypotheses and viewpoints
and are of a prospective nature. In this regard, the Economic Research Department of Euler Hermes has no responsibility for
the consequences hereof and no liability. Moreover, these analyses are subject to modification at any time.