European Economic
and Social Committee
Revision of the Late Payments Directive
Background
The Commission's proposed revision of the Late Payment Directive is intended to create a fairer business environment for economic actors, especially micro, small and medium-sized enterprises (MSMEs), which often receive late payments for the goods and services they provide.
However, the European Economic and Social Committee, in its opinion on the proposed legislation, believes that, in practice, the set of proposed rules will deprive MSMEs of the flexibility they require from their business partners and would impose unnecessarily hard conditions on them.
The opinion highlights the problems that a systemic culture of late payments in some parts of the EU can present for businesses at a time of supply-chain disruption and relatively high inflation – although it notes that the culture of late payments differs considerably across sectors and Member States.
This is especially challenging for MSMEs because larger companies can often use their market power and position to dictate terms that favour themselves. This can lead to cashflow problems and, in some cases, the failure of MSMEs, which lack the resources to pursue debtors through the courts.
The Committee further points out that, on average, public authorities pay invoices later than private entities, and it calls on public authorities to lead by example and comply with the rules in place.
Key points
The EESC:
- believes that the Commission, with its proposal, is attempting to tackle the issue of long payments instead of late payments. It introduces excessively restrictive measures, instead of improving the current enforcement framework with more effective rules;
- underlines the importance of flexible negotiations when setting payment terms and highlights strong concerns over the Commission proposal, believing that, in effect, the proposed 30-day cap eliminates contractual freedom between companies;
- underlines that introducing national enforcement bodies may have potential benefits but stresses that such authorities will have to operate objectively and guarantee maximum confidentiality when processing the commercially sensitive information of both companies and public authorities, without imposing further reporting obligations.
Additional information
EESC section responsible: Single Market, Production and Consumption (INT)
Opinion type: referral
Rapporteurs: Panagiotis Gkofas (Civil Society Organisations – EL), Alena Mastantuono (Employers – CZ), Angelo Pagliara (Workers – IT)
Date of adoption by section: 20/12/2023
Result of the vote: 71 votes in favour, 8 against, with 4 abstentions
Date of adoption by plenary: 17/1/2024
Result of the vote: 215 votes in favour, 14 against, with 8 abstentions
Contacts
Daniela Marangoni
Press officer
Tel.: + 32 2 546 8422 | Mob: +32 475 99 94 32
Email: daniela.marangoni@eesc.europa.eu
Dalila Bernard
Policy officer
Tel.: +32 2 546 8438