Commission's Small Business Act fails on late payments

Intrum Justitia, Europe's leading credit management services provider, welcomes the EU Commission's launch of the Small Business Act (SBA) that seeks to considerably improve the business environment for SMEs. Realising that the conditions for full growth of European SMEs have been less than ideal, this SBA contains a large amount of elements that could potentially improve the present situation for SMEs.

However, on the issue of late payments the SBA unfortunately failed to propose any new and radical measures that would markedly improve the existing Late Payment Directive. The SBA only points out that an amendment to the Directive (2000/35) is prepared. The work to prepare an amendment has actually been under way for more than a year in the Commission.  Therefore the SBA has failed to include new and substantial solutions to the ineffective Directive.

"At Intrum Justitia we clearly see the negative effects of late payment, particularly to small businesses", says Intrum Justitia's CEO Michael Wolf, adding that, "present legislation just doesn't provide adequate protection for small businesses in relation to large corporations".

In 2007 the European business community missed out on a record amount of EUR 250bn as a consequence of outstanding invoices. Not only had the total sum of outstanding invoices risen to record heights. The percentage of unpaid invoices was also at its highest level ever. The average number of days before an invoice was paid in Europe rose to 55.5 – almost 4 weeks too late. Hence it is clear that speedier debt collection is crucial to the survival of SMEs.

Regrettably the SBA has missed the opportunity to adequately attend to this crucial point. Intrum Justitia calls on the Commission to not only ensure that the issue of late payments moves higher up on the political agenda, but also focus its efforts on proposing a radical and effective proposal to amend the existing Late Payment Directive which eventually can reverse the tendency of paying late, severely harming SMEs and the European economy overall.

Intrum Justitia is Europe's leading Credit Management Services (CMS) group, with revenues of approximately SEK 3.2 billion and 3,100 employees in 24 markets. Intrum Justitia strives to measurably improve its clients' cash flows and long-term profitability by offering high quality in relationships with both clients and debtors in each local market. The group offers a wide range of services to manage commercial and consumer receivables.