Press release: International payment culture puts pressure on prolongation of payment terms in Estonia
Krediidiinfo’s study “Credit policy of Estonian companies, 2016” demonstrates that during the past 7 years the average invoice payment term in Estonia has been gradually increasing and now reached 16.5 days. The situation in our country is influenced by longer payment terms applied elsewhere in the world.
During the year, the proportion of invoices with longer payment period (15-60 days) has significantly increased. These invoices formed the total of 40% of all invoices. At the same time, the share of invoices with shorter payment deadlines (1–14 days) and prepayment invoices has decreased. The average payment due period in Estonia is 16.5 days.
Estonian payment culture is very good – 71% of companies pay their invoices in due time. A total of 14% of the invoices are paid with a slight delay of up to seven days. Longer payment delays (8–30 days) characterise only 11% of invoices, and payment of 4% of invoices is delayed for more than 30 days.
The average payment delay is record-low and only constitutes 6 days.
Majority of Estonian companies (88%) is generally satisfied with the payment discipline of their clients. Adoption of crediting decisions takes less and less time. Already more than 38% of companies make credit-related decisions in just few minutes. At the same time for clients crediting is becoming more convenient. Only 12.7% of clients have to fill credit applications.
In case of crediting a new client, three quarters of Estonian companies run checks for tax arrears, and 53% of respondents check for debts to business partners (in the Payment Default Register). With regard to existing customers credit-related control is carried out twice as rarely – the corresponding figures are, respectively, 32% and 24%.
The most important indicators when making credit decisions include existence of debts to suppliers (88%) and outstanding customer accounts (74%). Only 17% of companies pay attention to annual reports, and 12% to financial indicators.
About one third of companies do not apply any sanctions with regard to customers with debts, while 47% of respondents refuse the credit option. Over the past year more companies started to reduce the payment period for future invoices and provide information to the Payment Default Register.
Out of professional credit counselling services reminder and credit supervision services (22%) are becoming increasingly popular. At the same time, use of collecting agencies has been decreasing during the past four years – only 14% of businesses use such services.
Krediidiinfo AS has been performing credit policy studies among Estonian companies since 2001. This study was conducted between 10 and 15 February 2016. The sample comprised of one thousand randomly selected companies registered and operating in Estonia.
Krediidiinfo AS – is an international company specializing in credit information gathering, processing and intermediation, while focusing on decreasing financial risks of Estonian companies.
The full study is available on Krediidiinfo’s website.
Alar Jäger, CEO of Krediidiinfo AS
Tel.: 665 9611