This guide explains what buyers must know when paying suppliers in the European Union and elsewhere in Europe. We cover payment methods, such as bank transfers, letters of credit, and credit card payments. In addition, the guide explains what you must know about payment terms, supplier credit, and making payments in EUR, USD, and GBP.
Supplier Overview
Currencies
Most suppliers in the European Union can issue invoices in euros. This includes manufacturers and trading companies located in non-eurozone countries, such as Poland, Romania, and Sweden. However, you also have the option to pay these suppliers in their national currencies – such as the SEK or Polish złoty.
Bank transfer
Most manufacturers and wholesalers in the European Union primarily, sometimes exclusively, accept payment via bank transfer. This is also known as a regular wire transfer or a telegraphic transfer.
To settle a bank transfer, you need to obtain the following information from the supplier:
- Beneficiary name
- Beneficiary address
- International Bank Account Number (IBAN)
- SWIFT/BIC
- Bank*
- Bank address*
*This is not always required if you have a SWIFT or BIC.
All the information above is normally specified in their invoice.
It normally takes 1 to 4 days before the suppliers receive the funds. Further, it is important to get the bank account details right as the payment can otherwise be returned, after a lengthy delay and with the transfer fees deducted.
Letter of credit
Another option is to pay a supplier by letter of credit. This means that your bank will pay the supplier, and you pay the bank later – which could be months later or in instalments. The payment is released based on pre-defined conditions – which are documented.
As such, you don’t need to pay upfront.
For example, the bank could be instructed to release the funds only when a shipping receipt is provided from a certain freight forwarder.
That being said, most suppliers are only willing to accept payment by letter of credit if the order is large enough to make it worthwhile the fees and effort. If you order for anything less than 50,000 EUR, then a letter of credit is less likely to be accepted.
Credit card
Few manufacturers and wholesalers in the EU and elsewhere in Europe accept payment by credit card. This is likely due to the fact that credit card payments can be relatively high.
Payment terms
Assuming you pay your supplier by bank transfer, you can expect to pay a 30% to 50% deposit upfront – before they start production. The remaining 50% to 70% is paid after quality inspections and testing – if any – but before the shipment.
FAQ
Do European suppliers offer credit?
It is rare that suppliers in the EU and elsewhere in Europe are willing to sell on credit – in the sense that you buy now and pay later. Most factories have rather slim margins, and a single failed payment could result in financial disaster.
Such arrangements can sometimes be extended to long-term buyers that frequently order significant volumes – or multinationals. However, for small to medium-sized companies it is often a better option to contact a trade financing company instead.
Do European suppliers only accept EUR?
No, many suppliers accept payments in their national currency as well, assuming they are not located in the eurozone. This includes Poland, Romania, Hungary, Check Republic and Sweden.
In which countries do suppliers always accept EUR payments?
Suppliers located in the following Eurozone countries should always accept euro payments:
- Austria
- Belgium
- Croatia
- Cyprus
- Estonia
- Finland
- France
- Germany
- Greece
- Ireland
- Italy
- Latvia
- Lithuania
- Luxembourg
- Malta
- the Netherlands
- Portugal
- Slovakia
- Slovenia
- Spain
Do European suppliers accept US dollars?
European suppliers can sometimes issue invoices in USD, but the rate will be tied to the EUR to USD exchange rate. They may also need to add a margin to factor in unfavourable changes in the exchange rate in the short term.
It is often more beneficial for the buyer to pay European suppliers in EUR or the national currency rather than US dollars.
Do European suppliers accept GBP?
Some suppliers are willing to issue invoices in GBP. However, these tend to be adjusted based on the EUR to GBP exchange rate, with a margin added to factor in currency fluctuations. Hence, it is often more beneficial for British importers to settle payments in EUR – which can often be done via their online banking service.
