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Euler Hermes publishes its “2018 Collection Complexity Score and Rating”, which aims to support decision makers when trading internationally.
Western Europe sets the example for the rest of the world with Sweden, Germany and Ireland ranking among the least complex countries when it comes to debt collection.
At the opposite end of the spectrum, Saudi Arabia, the United Arab Emirates and Malaysia are the three most complex countries when it comes to international debt collection.
Euler Hermes’ “2018 Collection Complexity Score and Rating” aims at measuring the level of complexity relating to international debt collection procedures within each of the 50 countries taken into consideration. Three main factors were analyzed: local payment practices, local court proceedings and local insolvency proceedings. It therefore provides a simple assessment of debt collection proceedings in each country, helping to support decisions and manage expectations when trading internationally.
Western European countries lead the pack While the global average stands at 51 on a 0-100 scale, showing a very high level of collection complexity around the world, Western Europe stands out when it comes to simplifying the life of companies trying to recover their dues.
Sweden, Germany and Ireland take the lead, ranking as the least complex countries with respective scores of 30, 30 and 31. Sweden and Germany really set the example, being the only country with the lowest score of complexity in local payment practices, local court proceedings as well as in local insolvency proceedings.
The region also presents the highest number and share of countries at a “notable” collection complexity. Fourteen out of 16 countries stand at the less severe level, the exceptions being Greece and Italy, (both rated as high level of collection complexity).
The Middle East stands at the opposite end of the spectrum with Saudi Arabia and the United Arab Emirates ranking as the most complex countries when it comes to debt collection. With a score of 94, international debt collection is three times more complex in Saudi Arabia than in Sweden.
Asia-Pacific is not far behind and counts the highest number of countries standing at a severe rating of collection complexity, with Malaysia (right behind the United Arab Emirates), China and Indonesia.
Euler Hermes’ report also demonstrates that the largest economies, most dynamic markets, and the less vulnerable countries do not necessarily entail more conducive a business environment.
Pockets of collection complexity exist in all countries, even in Sweden. Indeed, complexity in international debt collection depends on many different factors. At a global level, it appears that the key factor of complexity are by far local insolvency proceedings, which are not always effective, that is, taking into account priority rules and cancellation of prior transactions.
“A key rule applies to debt collection: the longer one waits, the greater the complexity and risks. That is why we want to help our clients to make the right decision at the right time. The Euler Hermes 2018 Collection Complexity Score and Rating provides a simple assessment of debt collection procedures in each country, helping to support our clients with key information when and where they want it,” said Jennifer Baert, Group Head of Collection at Euler Hermes.
Euler Hermes is the global leader in trade credit insurance and a recognized specialist in the areas of bonding, guarantees and collections. With more than 100 years of experience, the company offers business-to-business (B2B) clients financial services to support cash and trade receivables management. Its proprietary intelligence network tracks and analyzes daily changes in corporate solvency among small, medium and multinational companies active in markets representing 92 percent of global GDP. Headquartered in Paris, the company is present in over 50 countries with 5,800+ employees. Euler Hermes is a subsidiary of Allianz, listed on Euronext Paris (ELE.PA) and rated AA by Standard & Poor’s and Aa3 by Moody’s. The company posted a consolidated turnover of 2.6 billion euros in 2016 and insured global business transactions for 883 billion euros in exposure at the end of 2016.
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Euler Hermes Group
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