Call for Input Consultation on Late Payments Regulation
The EU to create a Regulation on combating late payment in commercial transactions which will replace the Late Payments Directive. The Department of Enterprise, Trade and Employment is seeking the views of stakeholders on this proposal. This proposition will mean significant changes to the current rules which aim to address shortcomings identified in the Directive.
- A maximum payment-term cap of 30 days for both business-to-business transactions and transactions between public bodies and business. The existing Directive lays down a payment term of 30 days in B2B transactions. However, this can be extended to 60 days or more “if not grossly unfair to the creditor.
- Under the new proposal the creditor cannot waive its right to claim interest for late payment. A contractual provision or practice to the contrary would be unfair, and therefore null and void of any legal effect.
- Late payment interest will remain at the reference rate plus 8 percentage points. In addition, the new rules raise the flat fee compensation from 40 EUR (or equivalent) to 50 EUR (or equivalent) per commercial transaction paid late.
- The new proposal lays down enforcement and redress measures to protect creditors against bad payers. Under the new proposal, Member States are to set up enforcement authorities to monitor and ensure the application of the rules. These authorities shall have the power to receive complaints, initiate investigations and issue sanctions against late payers that are effective, proportionate, and dissuasive.
- The new Regulation also grants better protection of subcontractors in public construction works, which are particularly vulnerable to late payments, by ensuring public authorities have the power to verify that payments are effectively passed from the main contractor to the subcontractors.
- Under the new Regulation, Member States will facilitate availability and access of SMEs to credit management tools, financial literacy training and foster the use by SMEs of digital tools for timely payments.
The SFA plan to respond to this consultation to make the views of small business owners on the EU proposal known. To capture members views we ask you to complete a short questionnaire no later than Friday, 3rd November.