Recast of Late Payment Directive Still Showing Holes

On 31 August, the European Commission, Council and European Parliament reached a draft deal on the recast of the Late Payments Directive, agreeing that the Directive will also apply to business-to-business payments, where all suppliers have to be paid within 60 days "unless otherwise expressly agreed between the debtor and the creditor, and provided it is not grossly unfair to the creditor".

Further controversial issues are left unresolved, as opinions within the trialogue differ with regard to a 60 day payment deadline for certain public bodies. A second meeting has taken place on 6 September, with a possible third meeting scheduled later this year.

The final version of the recast of the Late Payments Directive remains set for a final plenary vote in the European Parliament during the second half of October this year.

Tina Sommer said: "The European Small Business Alliance welcomes the decision to include business-to-business transactions into the Directive, as one of the key obstacles to small businesses is late payment by larger businesses, often resulting in financial paralysis for the small supplier.

"However, a major obstruction remains as the draft Recast states that "Payments shall not exceed 60 days unless otherwise expressly agreed between the debtor and the creditor, and provided it is not grossly unfair to the creditor", leaving a major risk for small businesses to be forced to accept these exemptions by larger contractors.

Although it is essential that agreement is reached within a timely fashion for the aims of the recast Directive to finally reach its intended beneficiaries, ESBA urges the European Parliament not to accept this obvious loophole and to apply the 60 day rule without exception.

ESBA is a non-party political European group, which cares for small business entrepreneurs and the self-employed and represents them through targeted EU advocacy activities. ESBA also works towards the development of strong independent advocacy and benefits groups in European countries. ESBA is one of the largest organisations based on voluntary membership in Europe. Through its direct membership, associate membership and cooperation agreements, ESBA today represents almost one million small businesses and covers 36 European countries.