Payment behavior

The term payment behavior refers to the behavior consumers and customers have around the payment of our products or services.

Payment behavior can be viewed from a socio-economic perspective - and from a more intimate business perspective.

In this article, we focus on both - but with a special focus on businesses and what businesses can do with payment behavior.

Payment behavior in a societal perspective

The concept of payment behavior covers a wide range of exciting topics - topics that are especially relevant now that the payments market has become much more digital and payment options have changed significantly over the past decade.

Consumer payments have changed over the years - from cash payments with coins and notes, to payment cards, to a wide range of digital services.

That's why you'll often find that when people talk about payment behavior, for example in the daily press, it will typically be in the context of how customers physically pay - and thus how they pay.

Payment behavior from a business perspective

When talking about payment behavior at a company, the topic also revolves around how customers pay - often with a focus on saving transaction fees, acquiring agreements and the like.

But often, payment behavior in corporate accounting is not about how the customer pays - it's much more about when they pay.

Because customer payment behavior is incredibly interesting for businesses - especially if it changes over time.

The vast majority of companies' customers pay their bills on time, i.e. on the invoice payment deadline. This means that the company often has the money for the work performed the same day - or 1-2 business days after the transfer is made by the customer.

Other customers choose to pay before the payment deadline, while some unfortunately pay their invoices long after the deadline.

Payment behavior often reflects the customer's financial situation

The customer's payment behavior is often relevant when making assessments of a customer - including for credit granting, credit ratings, loans and the like.

Because customer payment behavior is often a good indicator of their financial circumstances and situation.

If customers consistently pay their invoices before the payment deadline - or on time - it's often a good and healthy financial situation and a sign of proper business management.

However, if customers consistently pay their invoices late, it's often a sign of the opposite: poor or bad business practices - and typically a tight financial situation.

Customers who consistently pay late often show signs of poor cash flow - and this can be a sign that the customer is choosing to prioritize the payment of their expenses.

Changing payment behavior should have your attention

Customers who consistently pay their invoices late should always have your attention - partly because they are statistically more likely to not pay at all than those who consistently pay on time.

But actually, you should also pay attention to customers whose payment behavior changes - for example, from always paying on time to suddenly paying late or not paying at all.

A shift in payment behavior is often a sign that the customer's financial situation has changed - from good to bad.