77% of Hungarians pay their invoices on time

Compared to last year, there was no significant change in payment morale – it was revealed by the latest research of EOS Group on European Payment Practices.

Budapest – 26th September, 2018 – 77% of the invoices are paid on time by Hungarian customers, so it can be said that the ratio has stabilized, which broadly corresponds to the regional average. Hungary has participated in the research for the sixth time this year, which was conducted by one of Europe’s leading receivables management companies and TNS Kantar research institute. In the survey, 17 countries, about 3400 decision-makers were asked about corporate and private customers’ payment habits.

There is no significant change in payment deadlines: in 2018, Hungarian companies issued their invoices with an average of 38-day payment deadline, just like a year earlier. The average payment deadline of invoices for private customers is 30 days, which is 10 days less than of invoices for business customers (40 days). In Hungary the payment deadlines are slightly longer than the Eastern European average (35 days).

In 2018, 19% of invoices were paid default – similarly to last year's rate, which is the same as the Eastern European average. If we look at the trends of recent years, there is a clear improvement in the payment habits of Hungarians, as in 2014, 74% of invoices were paid in time, while 21% were default.

The rate of bad debts is the same as last year, 4% of the invoices issued in Hungary are not paid at all, which shows a significant improvement of 2 percentage points compared to 2014.

Non-payment and late payment have similar reasons for private and business clients. Clients of the market players for the corporate sector mentioned the following causes of late payments and defaults: payment problems by other clients (54%), use of supplier loans (50%) and bankruptcy (46%); while 60% of non-paying individuals referred to financial problems and 45% to total insolvency. In the surveyed companies, intentional defaults were mentioned in 28% for business customers, and 40% met the problem in case of private customers. Beside intentional fraud, this ratio also involves dissatisfaction or the question of the invoice’s legitimacy.

Marianna Agárdi, Unsecured collection directorate of EOS Faktor Co. said: "This year's research shows that the positive payment behaviour of Hungarian customers has stabilized. Nevertheless, the rate of intentional default still remains fairly high. Debt collection of such debts is less effective with the companies’ internal receivables management methods and opportunities, so it could be helpful to involve an external, professional receivables management partner. External partners are employed by every second (48%) surveyed Hungarian company," said the expert.