In France, inter-company credit is estimated at €672 billion per year... This estimate makes companies the main bankers of companies, and in this context, the analysis of payment behavior is a key element in risk assessment.
To secure inter-company credit, it is necessary to distinguish healthy companies from those in difficulty, or even defaulting, by analyzing their solvency (scoring, financial analysis and study of payment behavior).
Financial data is still relevant for risk prevention, but it is no longer a sufficient basis for analysis. Payment behavior reflects how quickly customers pay their bills, on time or late. In other words: their ability to meet their short-term commitments.
The payment term
One of the key measures of the Law on the Modernization of the Economy (LME) was to introduce provisions governing payment periods. Payment terms are the period of time stipulated in a contract between the delivery or invoicing of a good/service by the supplier or service provider, and the payment by the customer.
For the payment of invoices between professionals, the payment is made by default with a maximum deadline fixed at the 30th day following the reception of the goods or the execution of the service. Note that this default deadline applies in the absence of any mention of a deadline in the contract.
It is possible to apply other deadlines provided that the payment has been negotiated between the partners in the professional contracts. This negotiated payment term can be up to 60 days after the invoice is issued or up to the end of the month after 45 days.
In addition, there are also specific deadlines for companies in certain sectors of activity(Article L441-11 of the Commercial Code). The term of payment must appear on the invoice and in the general terms of sale (GTC).
The situation
The delay in payment corresponds to an abnormally long period of time not provided for by the contract, or even a total absence of payment of the services.
| Average delay | ||
| Geo zone | T4 2019 | T4 2021 |
| France | 11.3 days | 12.5 days |
| Europe | 13.1 days | 13.6 days |
While the average payment delay remains below the European average, it has not returned to the level it was before the health crisis.
| Company size | 2020 | 2021 |
| GE | 17.1 days | 17.4 days |
| ETI | 14.8 days | 14.9 days |
| SME | 12.9 days | 12.6 days |
| TPE | 12.8 days | 12.4 days |
The average payment delay, which was already high in 2020, has deteriorated further in 2021 among mid-sized companies and large companies. Conversely, VSEs/SMBs, with a lower payment delay in 2020, are improving their payment behavior.
Not all late payments are due to bad faith or insolvent customers. Indeed, other factors can explain these incidents... Which are not all attributable to customers. Nevertheless, when a company constantly delays its payments, we can deduce that it has more and more difficulties to keep its commitments, that it encounters cash flow problems.
Impact on the development of the company
Bad payers" have very negative consequences for a company. In addition to the fact that they mobilize the company's resources (follow-up and reminders), unpaid and late payments are factors that increase the BFRE, which can lead the company to take out a bank loan to finance its current activity.
For unpaid invoices, the penalty is heavier because the company will have to compensate this loss by increasing its turnover. Bad payers" certainly slow down the company's investment capacity and therefore its development... In some cases, they can lead to the company's failure.
The best way to avoid late payments and non-payments is to anticipate them. To be able to do this, it is necessary to have a good visibility on the payment behaviors of your third parties. Ellisphere's D³ Program allows you to have this visibility.
D³ and its advantages
D³ (Data-Giving) is a national payment experience collection program. For several years, Ellisphere has been mobilizing its resources and expertise on the topic of payment behavior.
In order to raise awareness and encourage companies to join the program, Ellisphere offers value-added services in return, enabling more detailed management of the business. By joining this collaborative program, you contribute to making the indicators that serve you on a daily basis more and more relevant... You become an actor in securing your credit.
YOUR DATA + OUR EXPERTISE = FOR A RELIABLE BUSINESS WORLD AND SUSTAINABLE GROWTH
