Payment Terms in Germany
Learn to understand which payment terms in Germany, against German companies, are advisable.
A guide for international companies.
Typical Payment Terms in Germany
Standard payment terms in Germany is “Zahlungsziel 30 Tage netto” (payment due in 30 days net).
This means that the invoice must be paid within 30 days from the invoice date, without any deductions or discounts.
In some cases, companies may offer discounts for early payment, such as “Skonto” (a discount for paying within a certain number of days). This discount is typically around 2-3%.
Another common payment term in Germany is “Zahlungsziel 14 Tage netto” (payment due in 14 days net). This payment term is often used for smaller invoices or for business-to-consumer transactions.
For larger transactions or projects, companies may negotiate longer payment terms in Germany. It’s not uncommon for payment terms to be extended to 60, 90, or even 120 days, especially for international transactions. ‘
However, it’s important to note that longer payment terms may increase the risk of late payment or non-payment, and may require additional security measures such as trade credit insurance.
Tips for Negotiating Payment Terms in Germany
If you’re new to doing business in Germany, negotiating payment terms with your customers can be a challenge. Here are some tips to help you navigate this process:
Do your research: Before you start negotiating, research the standard payment terms used in your industry and in Germany as a whole. This will give you a better understanding of what’s typical and expected.
Be clear and upfront: When you’re negotiating payment terms, be clear and upfront about your expectations. Make sure your customer understands when payment is due and what the consequences are for late payment.
Consider incentives: If you’re having trouble getting a customer to agree to your payment terms, consider offering incentives such as discounts for early payment or installment plans.
Risks of Non-Payment in Germany
While Germany has a strong economy and a stable business environment, there is still a risk of non-payment or late payment.
This can be particularly challenging for international companies that are new to the market or working with unfamiliar customers.
Here are some of the risks you should be aware of:
Cultural Differences: Germany has its own unique business culture, and it’s important to understand the customs and expectations around payment terms. For example, Germans tend to be very detail-oriented and may expect invoices to be accurate and well-organized.
Payment Practices: While the standard payment term in Germany is 30 days net, some companies may try to negotiate longer payment terms or may delay payment for various reasons. This can be particularly challenging for smaller companies or those with limited cash flow.
Legal and Regulatory Issues: If a customer fails to pay, there may be legal and regulatory issues that you need to navigate. This can be particularly challenging for international companies that are unfamiliar with the German legal system.
In conclusion, understanding the typical payment terms used in Germany is important for international companies that are doing business in the country.
By adopting these terms and taking steps to manage your accounts receivable, you can build trust and establish strong relationships with your German customers.
But it is also important to be aware of the risks of non-payment and consider using debt collection services in Germany if necessary to protect your business.
By being proactive and taking the necessary precautions, you can ensure that your business is successful in the German market.
Insolvency proceedings against German companies!