In a decisive move, European Parliament members have adopted new regulations aimed at addressing the persistent issue of late payments, a particularly harmful scourge for small and medium-sized enterprises (SMEs) across the European Union.
European Parliament Members Act on Payment Delays
As a significant portion of invoices within the EU remains unsettled on time, the new measures introduce a strict 30-day payment deadline for transactions between businesses and between governments, with some exceptions under specific conditions.
Enhancing Payment Discipline
The Committee on the Internal Market and Consumer Protection has adopted its position on the regulation aimed at enhancing payment discipline among various entities, including large enterprises, SMEs, and public authorities.
Crucial Support for SMEs
This initiative underscores a significant effort to bolster the competitiveness and resilience of businesses, especially SMEs, which represent 99% of EU enterprises and are crucial to the economy.
Maximum 30-Day Payment Deadline
The proposed regulation provides for a maximum 30-day payment deadline, with the possibility of extension up to 60 days for inter-business transactions, provided it is explicitly agreed upon in the contract.
Specific Measures for Certain Sectors
Special considerations are given to the retail sector, allowing payment terms of up to 120 days due to factors such as seasonality and product turnover, with the European Commission set to release guidelines for clarity.
Protection Against Payment Delays
To protect businesses, especially SMEs, against harmful payment delays, the regulation mandates automatic compensation for late payments, ranging from 50 to 150 euros per transaction, depending on the value.
New Enforcement Mechanisms
New enforcement and recourse mechanisms are introduced, alongside awareness-raising measures and promotion of electronic tools to expedite payment processes.
Establishment of a European Observatory on Payment Delays
A European Observatory on Payment Delays will be established to monitor and disseminate data on payment practices, thus enhancing transparency and accountability in member states.
Conclusion: Towards Better Financial Health for European SMEs
This initiative is hailed as a major step forward in promoting a more responsible and predictable payment culture, beneficial to the entire European economy.
Next Step: Final Adoption at April Plenary Session
The next step will involve voting at the April plenary session, where the regulation will be examined to establish the Parliament’s final position. This development is part of a broader strategy to improve the operational environment for SMEs in Europe, thereby contributing to strengthening the growth, innovation, and competitiveness of the EU as a whole.