Stronger European rules on late payment

15th of October 2010

New rules to speed up bill payments by public authorities across the European Union have been agreed in Brussels. The regulations will require local authorities to make payment within 30 days in most cases, a move aimed at improving cashflow for small and medium-sized companies in particular.

In exceptional circumstances payments can be delayed for up to 60 days, but that is the maximum extension. Countries may, however, choose a general deadline of 60 days for public entities providing healthcare – such as hospitals. This is because of the more complicated system of reimbursements in this area under social security systems.

If a payment is late, authorities will have to pay a surcharge of eight per cent on the money owing, as well as a fixed amount of €40 as compensation for the creditor’s recovery costs.

Needs approval

“The deal means small and medium-sized enterprises will no longer be forced to serve as banks for public enterprises or big companies,” said Barbara Weiler, the German MEP who led negotiations for the European Parliament.

This update to the EU's late payment directive must be formally approved by the full parliament this month, and by the member states. Small businesses will certainly welcome any progress - a pan-European survey last year showed the average delay in getting payment beyond the agreed term rose by 12 per cent to 19 days, from 17 in 2008. The worst countries for late payment included Portugal and Greece, while the best were the Nordic countries.

UNI Europa, the umbrella organisation covering trades unions representing the cleaning sector, welcomed the initiative and implored employers in the sector to ensure its benefits are passed down to workers.


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