Delays in payments for commercial operations cause serious cash flow problems for SMEs operating in EU territory. In 1993, the European institutions began a long process of combating late payments in commercial operations. On June 29, 2000, the European Parliament and the Council definitively approved Directive 2000/35/EC, which establishes measures to combat late payment. Two decades after the promulgation of this directive, the community institutions warned that it had not solved the problem of late payment. In 2009 the EC promoted a proposal to reform directive 2000/35/EC. The initiative materialized in Directive 2011/7/EU of the European Parliament and of the Council, of February 16, 2011, which establishes new measures to combat late payment.
Now, the EC realized that late payments continue to have a great impact on SMEs. One in four bankruptcies is due to bills not being paid on time. One of the causes is asymmetries in bargaining power between a large or more powerful customer and a smaller supplier. The result is often that suppliers have to accept unfair payment terms. In the EU, one in two invoices is paid late or not at all. Delinquency increases in times of crisis and economic turbulence. SMEs that rely on regular and predictable cash flows are more vulnerable. Delinquency creates more delinquency. In Europe, 70% of companies confirmed that getting paid on time would also allow them to pay their own suppliers on time.
To address the problem, the EC proposed on September 12 a new regulation that reforms the directive in force since 2011. This revision aims to provide fairness in commercial transactions, increase the resilience of SMEs and supply chains, encourage more use widespread digitalization and improve the financial knowledge of entrepreneurs. The Commission proposes to replace the current directive with a regulation. Unlike a directive, a regulation is directly applicable and establishes the same provisions throughout the EU, which benefits companies that depend on cross-border trade in the EU. In addition, it introduces stricter measures to prevent late payment practices in the form of maximum payment terms, guarantees the payment of accrued interest and collection costs, and establishes new enforcement and redress measures to protect creditors from bad actors. payers. The proposed regulation introduces a single maximum payment period of 30 days for all commercial transactions, including B2B and transactions between the public sector and private companies. It will be the same throughout the EU. The principle of autonomy of the will to draw up contracts will be limited to the parties being able to negotiate any payment term as long as it does not exceed 30 days.
