The first European order often arrives with a request for payment terms, and the instinct is to read it as a lack of trust. It is not. Deferred payment between businesses is the ordinary way commerce works in Europe, the same way a deposit before production is ordinary in China. Both sides are describing their normal, not testing the other.
What the law sets, and what it leaves to you
A European directive on late payment sets outer limits for commercial transactions — in broad terms, sixty days between businesses and thirty to sixty for public authorities — and gives the creditor a right to statutory interest when those limits are exceeded. It is a directive, so each country has its own transposition, and the Commission has a revision in consultation. Treat it as a floor you can rely on, not as a substitute for what you write in the contract.
Four ways to carry less risk, from lightest to heaviest
| Arrangement | What it protects | What it costs |
|---|---|---|
| Partial payment before shipment | Your production cost, on a first order | Negotiation — many European buyers will accept it once, then expect terms |
| Credit insurance | Most of the invoice if the buyer does not pay | A premium, and the insurer decides which buyers it will cover |
| Documentary credit | Payment against documents, backed by a bank | Bank fees and paperwork; European SMEs often resist it for routine orders |
| Retention of title | Ownership of the goods until payment, where national law recognises the clause | Nothing, if it is written in the contract before delivery — and nothing at all if it is not |
Invoice discipline is half of it
- Issue the invoice the day the goods leave, not at the end of the month.
- Put the agreed payment term on the invoice itself, in figures and in words.
- Send it to the address the buyer nominates for invoices, which is rarely your sales contact.
- Chase on the day it falls due, politely and in writing. Silence is read as flexibility.
A buyer who pays late and a buyer who does not pay are different problems. The first is a cash-flow question you can price into the relationship; the second is a decision to stop shipping. Knowing which one you have requires asking early rather than waiting.