Past Due Stampt “The check is in the mail” is a common response given by debtors when contacted about a past due payment. While this excuse is a familiar one in North America, it may not ring true with credit managers in Europe. Why? Checks are an uncommon way of paying in most European countries, perhaps with the exception of France. The following example will give you an idea why this is so.

A few days ago I received a check for a small amount from a US-based company. In order to cash this check I had to go to my bank where the teller filled out a form for me to sign, together with the check. Both were then transferred for approval to the bank representative handling my account. The fees for this process range from EUR 8.50 to EUR 48.50, depending on the strength of the financial record of the person cashing the check. The funds were deposited into my account two days later, making it a total of one week from the time the check was written until I received the money. Electronic funds transfer would have made the money available almost immediately.

The use of credit cards also differs in Europe. While many business transactions are paid by credit card in North America, in Europe they are usually limited to payment for hotel stays, car rentals, or restaurant meals. In general, credit cards are not used for payment of invoices or payments of larger amounts. Debit cards are popular but only for household expenses such as clothing, groceries, and gasoline.

The primary method of payment for businesses in Europe is via electronic banking. For everything from invoices, to electricity, to taxes – approximately 95% of all commercial payments are handled by electronic transfer directly from a desktop computer. This method is easy, quick, and reliable and can be confirmed with a click of the mouse. The remaining 5% of commercial European payments are done via debit card, credit card, and in rare instances, by check.

To quickly get a payment from a European partner or to make a payment yourself, the most efficient method is electronic bank transfer.

In most cases, banking details including IBAN (International Bank Account Number) and SWIFT (Society for Worldwide Interbank Financial Telecommunication) or BIC (Bank Identifier Code) codes are provided on the invoice or letterhead. If making payment to a company in the US, you’ll need the name and address of the bank, account number (no IBAN code for the US and Canada) and the SWIFT or BIC code. If the bank doesn’t have a BIC code, you can use the ASA number instead. However, this will slow things down somewhat as it will route the payment via the agent of the European bank and then to the bank of the payee.

In any case, use of electronic banking will significantly reduce the amount of time it takes for payments to post to your account and provide you with an efficient mechanism for tracking them.

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Jan Hazes is an attorney and managing director of Hakort International Inc. based in the Netherlands and a member of the Commercial Law League of America.