News: International News

Payment Terms Reach a 10-Year High

Monday, May 7, 2018  
Share |

In 2017, DSO reached its highest level since 2007 at 66 days, according to the annual review and forecast of Days Sales Outstanding from Euler Hermes. This trend is expected to continue in 2018 with global average DSO to rise by one more day to 67 days. This lengthening of DSO in 2017 is widespread, as it has occurred in two out of three sectors and countries. 

The Electronics, Machinery and Construction sectors show the highest DSO (all above 85 days). On the other end of the spectrum are sectors in connection with Household consumption (Agri-food, Transportation and Leisure goods) where companies are paid a lot faster than global average.

China stands out once more with a three-day rise, reaching a 10-year high at 92 days.

The economic and financial crisis of 2007/08 had led companies to closely monitor or accelerate payment delays (60 days in 2008 on average). After five years of stability at 64 days, DSO reached a 10-year high. Moreover, the spread of DSO around its mean increased in 2017, with one company out of four being paid by its clients within less than 31 days, but one out of four being paid after 90 days.

The lengthening of DSO reflects a relaxation of payment standards between companies. This study of global payment behaviors shows that as the global economic health is improving, DSO tends to lengthen: there is a clear correlation between DSO and global economic activity such as measured GDP. In other words, now that the world economy is doing better, companies tend to trust their clients to pay them - despite the increase in insolvencies of large companies.

Euler Hermes forecasts a similar dynamic in 2018, with global DSO rising by one more day, to 67 days.

The increase in average DSO in 2017 stems from a global trend observed in most countries: it has occurred in two countries out of three. Three main groups of countries emerge with respect to the global average:

  • The seven strongest countries have an average DSO inferior or equal to 51 days, the country with the lowest DSO globally being New-Zealand with 43 days. Other countries with short averages are the Nordic countries (Denmark and Finland), Austria and Switzerland, the US and the Netherlands.
  • The next group of 7 other countries for which DSO remains below the global average, comprises amongst others Germany (54 days), Canada (54), Brazil (62), and the UK (53). It is worth noting that Russia is part of this group, with DSO decreasing by +2 days to 56 days, with one quarter of companies being paid under 22 days.
  • Finally, there is a remaining group of 12 countries with an average DSO superior to the global average of 66 days, such as France (74), Italy (83) and China, with the highest average DSO (92 days).


In China, where the average DSO exceeds already by far the global average, DSO rose by a further three days in 2017. In early 2018, it reached 92 days. It is worth noting that DSO increased in 12 sectors out of eighteen in China, compounded by the share of Chinese companies with DSO that exceeded 90 or even 120 days. In this country, 25 percent of companies wait 136 days to be paid.

Four sectors particularly stand out: Aeronautics (+four days in 2017, +12 days since 2012), Automotive (respectively +three and +seven), Construction (+three) and Electronics (+three), the sector with the highest DSO. 

DSO is once again far higher in B2B than B2C activities. The longest DSOs are in sectors with long manufacturing processes. At the other end of the spectrum are sectors closer to the end consumer, such as Food (46 days), Transportation (49 days) and Household equipment (49 days).