EU reviewing late payments to SMEs in Europe

Update from Margot Parker

Late payment is an issue in all industries, including the promotions sector. One out of four insolvencies is due to late payment. This leads to the loss of 450,000 jobs each year, adding to high unemployment levels in Europe. In addition, outstanding debts worth 23.6 billion euros are lost every year through insolvencies caused by late payment.

On 8th August 2000, Directive 2000/35/EC of the European Parliament and of the Council on combating late payment in commercial transactions was published in the official journal. The Directive entered into force on the 8th of August 2002, for the then 15 member states and the new members countries since then is being filtered in and on the 1st of January 2007 Bulgaria and Romania were also added.

DG Enterprise and Industry (a body which works to ensure that EU policies contribute to competitiveness of Enterprises) is starting the procedure for an impact assessment on the possibilities of amending the present Directive. A final report is expected for July 2008 and will be accompanied by appropriate proposals for improvements for this Directive.

Late payments in commercial transactions can have dramatic consequences for enterprise. When their invoices remain unpaid or when they are paid well after the deadline, many businesses face cash flow difficulties, this applies especially for SMEs, who frequently are not able to raise external finance to bridge the funding gap.

Margot Parker, Director
Eurocom-consult.com
www.eurocom-consult.com

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