Each year across Europe thousands of small and medium-sized enterprises (SMEs) are negatively affected by late payment. To protect European businesses against late payment, the European Parliament and the Council adopted Directive (EU) 2011/7 on combating late payment in commercial transactions between public authorities and businesses or between businesses. In the post-coronavirus recovery period it plays even bigger role as an effective tool to protect businesses across Europe.
Main provisions of the Directive
- Public authorities have to pay for the goods and services that they procure within 30 days or, in very exceptional circumstances, within 60 days.
- Enterprises have to pay their invoices within 60 days, unless they expressly agree otherwise and provided it is not grossly unfair.
- Automatic entitlement to interest for late payment and €40 minimum as compensation for recovery costs.
- Statutory interest of at least 8% above the European Central Bank’s reference rate.
- EU countries may continue maintaining or bringing into force laws and regulations which are more favourable to the creditor than the provisions of the Directive.