European Institutions must lead by example and support small firms by paying on time

The European Small Business Alliance (ESBA) welcomes the European Commission's proposal containing new measures to combat late payment in commercial transactions.

ESBA has been urging the European Institutions to pay their suppliers on time to ensure their survival during the current economic downturn. The European Institutions need to see it as their duty to lead by example by consistently making timely payments to SMEs.

For these reasons, ESBA has backed the latest inquiry by the European Ombudsman into the European Commission's payment practices

The European Commission already had its own European Recovery Plan, which details support for small firms, and ESBA has called for this plan to include commitments to fair payment practices on the part of the Commission and other European institutions. The new Commission proposal is a step in the right direction.

However, a mere option for SMEs to pursue payment is not sufficient. It is well established that SMEs are hesitant to pursue payment, fearing deterioration or loss of customer relationships.

Tina Sommer, ESBA President, said:

"Failure by European Institutions to pay in a timely fashion can cause considerable damages to small businesses. Due to the ongoing shortage of lending to small businesses by the banks, outstanding invoices represent working capital that needs to be made available according to the agreed payment terms. Small firms cannot and must not be used as convenient lending facilities. The Commission proposal in which institutions are bound by stricter rules is a step in the right direction. However, providing SMEs only with an 'option' to pursue late payment will not suffice in practice

ESBA is a non-party political European group, which gathers member organisations from 22 European countries. It currently represents over 1 million small business entrepreneurs and is one of the largest organisations based on voluntary membership in Europe. ESBA cares for small business entrepreneurs and the self-employed and represents them through targeted EU advocacy activities. It also works towards the development of strong independent advocacy and benefits groups in European countries.