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Europe acts to stop late payments

Date Added: 13/03/2013  

Late payments are regularly named by small to medium-sized enterprises (SMEs) as one of the reasons for them slipping into financial difficulties.

The European Commission has announced changes to legislation designed to ensure smaller companies are paid on time, which could prevent them having cash flow issues in the future.

It was revealed by the body that from Saturday (March 16th), member states will need to have integrated the revised Late Payments Directive into their national law.

This obliges public authorities to pay for goods and services within 30 calendar days or, in very exceptional circumstances, within 60 days, while businesses also ought pay their invoices within 60 calendar days, unless they expressly agree otherwise and if it is not grossly unfair to the creditor.

European Commission vice-president Antonio Tajani, commissioner for industry and entrepreneurship, stated it can be hard for SMEs to insist they get paid on time.

Dozens of SMEs go bankrupt in Europe every day as a result of financial problems caused by not being paid for their goods and services within a reasonable timeframe.

"Late payments mean SMEs lose time and money and disputes can sour relations with customers. This damaging late payment culture has to end," said Mr Tajani, who added: "It is now time for Member States to implement the Late Payments Directive into their national law - giving SMEs the vital support they need in these difficult times and helping them fulfil their key role in European job creation."

Plans announced by the UK government towards the end of last year showed the Department of Business, Innovation and Skills will name and shame those businesses that do not sign up to the Prompt Payment Code.

Business minister Michael Fallon stated that getting paid on time is vital to the health of SMEs across the country and explained it causes cash flow problems to bosses if they are not able to get money in at the right time.

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Posted by Julie Cutts

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