General corporate: Tackling late payments

United Kingdom
The Commission has stated that it will soon table a Proposal to reduce late payments in Europe.

Long payment periods have detrimental cash-flow effects and evidence suggests that small and medium-sized enterprises (SMEs) are particularly hard hit by late payments. In May 1995, the Commission issued a Recommendation on late payments but recent surveys show that this has had little effect. Contractually agreed payment periods in 1996 ranged from as little as 19 days in Finland to 75 days in Greece. Average late payments ranged from 7 days in Sweden and Denmark to 19 in Greece and 41 in Portugal. The average figures for the EU are 39 contractual credit days and 15 days overdue.

The Commission thinks that minimum standards are necessary, such as a statutory right for creditors to interest on late payments. Putting its money where its mouth is, the Commission has promised to pay interest to its own creditors if payments are not made within 60 days.