Pay on Time or Pay Up: New EU directive for Late Payers

pay on time

As you may have heared, the EC has recently passed a new directive instructing companies to settle payables within 60 days or else be faced with a penalty (in official terms: interest).

The idea behind the directive is that companies are unfairly being disadvantaged if their customers are paying late and should be corrected. The of paying late for EU Members is ECB financing rate -/- margin rate of at least 7 ppts. Non EU members may deviate. In practice this will mean that the cost will be at least 40K EUR per late payment.

Other key changes will be:

► Public authorities will have to pay for the goods and services that they procure within 30 days or, in very exceptional circumstances, within 60 days.

► Enterprises will have to pay their invoices within 60 days, unless they expressly agree otherwise and if it is not grossly unfair.

► Enterprises will automatically be entitled to claim interest for late payment and will also be able to obtain a minimum amount of €40 as a compensation for recovery costs. They can claim compensation for all remaining reasonable recovery costs.

► The statutory Interest rate for late payment will be increased to at least 8 percentage points above the European Central Bank’s reference rate. Public authorities are not allowed to fix an interest rate for late payment below.

This directive should be enacted in national law by mid-March for each EU Country. Training events are being organised in all Member States.

For further , please contact: ENTR-LATE-PAY-INFO-CAMPAIGN@ec.europa.eu

European Commission report on this subject can be found here and the campain here.

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