Research shows downward trend in late payment of invoices in Europe

There has been a reduction in the average payment periods for sales invoices across the EU over the last ten years, according to the latest research from the Grant Thornton International Business Owners Survey (IBOS). The survey of over 6,900 medium sized companies in 26 countries worldwide shows that the average figure in the EU has improved from 65 days in 1993 to 55 days in 2004.

The EU Late Payments Directive, which came into force in August 2002, may be having an effect. The directive creates an automatic right to claim interest on many debts which are more than 31 days old. The major driver, however, behind this improvement is more likely to be that the culture of late payment of invoices is decreasing and that company liquidity levels are less stretched than in 1993.

The average reduction is driven by reductions in France, Italy and the UK over the last ten years. While the UK now has the lowest period for late payments in the last 10 years, France has seen the greatest reduction over the last 10 years. The UK has improved by seven days from 53 to 46 days and France has improved by 10 days from 67 to 57 days. A similar improvement has been achieved in Italy where the average payment date is 83 days compared to 90.

In other countries - Germany, Ireland, the Netherlands, Spain and Sweden – there has been little annual variation in average payment periods since 1993. The picture in Greece is interesting with huge volatility in the period, although 1993 and 2004 levels are very similar.

Andrew Godfrey, Head of International and European Services, Grant Thornton, comments:

"The EU first introduced its late payments directive in the late 1990s to tackle the fact that one in four insolvencies in EU countries was due to late payment. It is an issue which continues to dominate agendas in medium sized businesses. The International Business Owners Survey shows an encouraging trend in the EU average. However, this is mainly driven by improvements in the UK, France and Italy over the last ten years, and there is still a long way to go in other EU countries."

Notes to editors

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