Review of Directive on combating late payment in commercial transactions

Subject: Review of Directive on combating late payment in commercial transactions

Late payment is a bane for all sectors of the economy, especially SMEs, given the additional costs incurred in chasing up offenders. This emerges clearly from a European Parliament analysis contained in its report on the implementation of Directive 2011/7/EC on combating late payment in commercial transactions and has been further highlighted by the impact of the COVID-19 fallout on SMEs.

The possibility of late payment provides a loophole through which long settlement terms are able to insinuate themselves to the possible detriment of business owners. It is therefore necessary to be constantly on the alert in order to ensure a level playing field between dominant undertakings and small market operators.

A large number of SMEs and start-ups in the Union are going bankrupt every year while awaiting payment from national government bodies among others.

Does the Commission intend, during its current term of office, to review the directive on combating late payment in commercial transactions, given the reticence of SMEs regarding invitations to tender for government contracts, knowing that payments risk being delayed by over 30 days?

Answer given by Mr Breton on behalf of the European Commission

(23 June 2021)

The Commission is fully committed to fight late payments in commercial transactions. Prompt payment is at the heart of economic resilience. Late payment behaviour was compounded during the crisis, which puts additional burden on small and medium-sized enterprises (SMEs). They in particular need reliable payments to succeed in their digital and green recovery.

Both the ‘SME Strategy’ (1) and the ‘Updated Industrial Strategy’ (2) highlight that the ‘Late Payment Directive’ (3) requires a more effective enforcement in the Member States. The Commission is working already on a set of actions to fight unfair payment practices, help SMEs to be paid on time, monitor late payments through an EU Observatory, and establish synergies between procurement procedures and payment obligations for public authorities.

Moreover, the Fit For Future Platform has included the Late Payment Directive in its work programme for 2021 (4).

These different streams of work will support the Commission in taking the most appropriate and relevant actions to strengthen the fight against late payments.

⋅1∙ COM (2020) 103.

⋅2∙ COM (2021) 350.

⋅3∙ Directive 2011/7/EU.

⋅4∙ https://ec.europa.eu/info/sites/default/files/2021_annual_work_programme_fit_for_future_platform_en.pdf