Open account

Avoid paying by cheque. If the customer insists, we recommend using a banker's draft, i.e. a cheque drawn on a bank. Collecting payment from company cheques can be both time-consuming and costly.

When you sell on open account, payment is usually made in arrears, for example 30 days after you have delivered as agreed and issued an invoice. You can find more information for each country about standard payment terms.

Bills of exchange are credit instruments that are rarely used today. There are two types: promissory notes and drawn bills of exchange (drafts). A promissory note is a commitment by the issuer to pay the amount. A drawn bill of exchange (draft) contains an instruction from the issuer to another person (the drawee) to pay a specified amount to a third party (the payee) on a specified due date. Contact your bank for more information about using bills of exchange.

A collection account is often preferred when handling large volumes in a particular market. An account is opened in the buyer's market, allowing local buyers to make payments into it. Transfers to the exporter's account with a Norwegian bank are made as agreed. You should discuss the costs and requirements for opening this type of account with your bank.

Intrum Justitia publishes an annual report on payments in Europe. According to the European Payment Report (EPR), payment terms remained very long in countries such as Italy, Spain, Portugal and Greece in 2016. Late payments and delays beyond agreed credit periods primarily limit small and medium-sized enterprises' opportunities for growth and job creation. According to Intrum Justitia, up to 7.7 million additional jobs could be created in Europe if businesses received payment for their sales sooner.

To address the challenges caused by late payments, the European Parliament has adopted the Late Payment Directive (2011/7/EU). The Directive covers commercial transactions between private and public enterprises, as well as between businesses and public authorities. Norway has aligned its legislation with the EU, while Switzerland has not. According to Intrum Justitia, only 28% of businesses in the EU are aware of the Directive. We therefore encourage Norwegian exporters selling to the EU on open account terms to incorporate the Directive into their contracts.

It is particularly important to establish a clear credit policy in your business and integrate your sales, marketing and finance activities so that you can monitor and continuously update your customer information more easily. You should have the people and/or financial resources to act quickly on debt collection and payment reminders, and to charge late-payment interest and other costs where appropriate.