Too many European businesses have closed because of late payment issues. The Late Payment Directive aims to combat late payments in commercial transactions. It requires payments for goods and services to be made within 30 days by public authorities and 60 days by businesses. It also establishes minimum interest rates for late payments and allows creditors to recover costs. National seminars help businesses understand their rights under the directive.

1. TOO MANY EUROPEAN BUSINESSES HAVE
CLOSED BECAUSE OF LATE PAYMENT

2. 03
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Luxembourg: Publications Office of the European Union, 2012.
ISBN: 978-92-79-26287-6
doi: 10.2769/53993
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“Europe is experiencing an unprecedented
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very high number of bankruptcies and of
How to obtain EU publications: job losses. Late payments make things
Free publications:
• ia EU Bookshop (bookshop.europa.eu)
v worse. It’s time for change. There’s no
• t the European Union’s Representations or Delegations. You can obtain their
a
contact details on the Internet (ec.europa.eu) or by sending a fax time to lose.”
to +352 2929-42758
Antonio Tajani
Priced publications: Vice-President of the European Commission
• ia EU Bookshop (bookshop.europa.eu)
v Responsible for Industry and Entrepreneurship
Priced subscriptions (e.g. annual series of the Official Journal of the European
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3. 04 05
Let’s fight late payment together Late payment causes thousands of
unnecessary bankruptcies each year
Every year across Europe thousands The rules are simple: Today’s reality for European the difference between solvency and
of Small and Medium Enterprises Debtors will be forced to pay interest enterprises, especially for SMEs, is bankruptcy. The economic crisis has
(SMEs) go bankrupt waiting for their and reimburse all the additional that late payment of their invoices presented numerous difficulties, but
invoices to be paid. It is time to end recovery costs of their creditor if they can cause bankruptcy and lead to job for SMEs the challenges presented
this damaging culture of late payment do not pay for goods and services on losses. Furthermore, late payment by late payment have grown
in Europe. time (30 days for public authorities results in administrative and financial disproportionately as credit lines and
and 60 days for businesses). burdens, which are particularly acute bank loans become less available.
Too many cases of insolvency in when businesses and customers are in
Europe are caused by late payment, different Member States. This in turn In order to protect against late
Our Late Payment Information
in particular amongst SMEs. Such can affect cross-border trade. payment and to improve the
Campaign provides information on the
insolvencies lead to job losses and can competitiveness of European
new directive and a forum for sharing
be a personal tragedy for the individual As a result, the entire European enterprises, the Late Payment Directive
best practices to help SMEs obtain
entrepreneurs involved. It is time to economy is negatively affected. SMEs was adopted on 16 February 2011. It
prompt payment.
stop this waste. and the craft sector are the most must be transposed into national law
vulnerable. For Europe’s valued SMEs, by Member States by 16 March 2013
It is often difficult for SMEs to stand up any disruption to cash flow can mean at the latest.
for their right to prompt payment. Late
payment can lead to high costs in time
and money, and a dispute can sour
relations with customers.
Europe helps to overcome the problem of
late payment
Pursuing payment has to be made
simpler; receiving payment on time has
to become the norm. The Late Payment Directive is designed The directive reflects the real
to combat late payment in commercial need to find solutions to improve
The ‘Late Payment Directive’ (Directive transactions, i.e. late payment between the competitiveness of European
2011/7/EU on combating late payment businesses or between businesses and enterprises. This directive, when
in commercial transactions) is the public authorities. Its ‘parent’ act, the properly implemented by Member
EU’s tool to combat overdue payment. Small Business Act (SBA), stems from States, will contribute significantly
It is part of Europe’s Small Business the Commission’s will to recognise the to the liquidity of enterprises and
Act (SBA) – a wide-ranging set of central role of SMEs in the EU economy therefore to employment and growth.
measures designed to make life easier and recognises that effective access to
for SMEs. finance is one of the major challenges Commercial transactions with
SMEs have to face. consumers are not covered by the
The directive provides a legal directive.
framework for pursuing debtors.

4. 06 07
What’s new in commercial transactions
between public authorities and
businesses?
If you are a public authority you These new measures are obligatory If you are a business involved in a general rule, such procedures
need to know that: for public authorities. They have a a commercial transaction with cannot exceed 30 calendar days
responsibility to set a good example a public authority, you need to unless otherwise expressly agreed
• ou must pay for the goods and
Y to the private sector and demonstrate know that: and provided it is not unfair to you
services that you procure within their reliability and efficiency by (the creditor).
30 days. honouring their contracts and paying 1. When signing the contract:
on time. • he late payment interest rate will
T
• f you do not pay within the
I • ccording to the new rules, the
A be a minimum of 8 percentage
deadline, you must pay interest public authority must pay you points above the European Central
at the statutory rate, in addition for the goods or services you Bank´s reference. This rate cannot
to reimbursing the creditor for procure within 30 calendar days. be negotiated. Any rate below this
the costs of recovering the late Only in very exceptional cases threshold is in principle considered
payment. You will not be given a can the public authority extend to be grossly unfair.
reminder. this period to a maximum of 60
calendar days. Any contractual 2. hen facing late payment
W
• he statutory interest rate for
T clause that establishes a payment from a public authority:
late payment will be at least period that exceeds 60 days will
8 percentage points above the be considered to be grossly unfair • fter the expiration of the
A
European Central Bank’s reference. and will either be unenforceable payment period, which is 30
Public authorities are not allowed or will give rise to a claim for calendars days as a general rule,
to fix a lower interest rate. damages. you are entitled, without the
necessity of a reminder, to impose
• f you have established a
I • ny contractual term in the
A the late payment interest rate plus
procedure of verification or contract that excludes interest for all recovery costs related to late
acceptance in the contract, or late payment will be considered payment, if you have not been
if it is provided for by statute, to be grossly unfair to the creditor paid. The late payment interest
the procedure cannot exceed 30 and will either be unenforceable rate is fixed at a minimum of at
calendar days unless otherwise or will give rise to a claim for least 8 percentage points above
expressly stated in the tendering damages. Contractual terms that the European Central Bank’s
process and in the contract. In exclude compensation for recovery reference.
addition, the procedure must not cost will also be presumed to be
be grossly unfair to the creditor. unfair. You are not obliged to, but you have
the right to take these actions against
• n very exceptional cases, the time
I • erification and acceptance
V your debtor.
limit for the payment period can procedures should be expressly
be extended to a maximum of 60 mentioned in the tender
calendar days. documents and in the contract. As

5. 08 09
What’s new in commercial transactions Summary of new measures
between businesses?
If you are a business involved in also request reimbursement of the • armonisation of the period
H • ore transparency and
M
a commercial transaction with recovery costs for the late payment. To for payment by public awareness: Member States
another business, you need to stop any abuse of negotiation power, authorities to businesses: will have to publish the interest
know that: you have further opportunities under Public authorities will have to rates for late payment so that
the directive to challenge grossly pay for the goods and services businesses have easy access to
• usinesses must pay their invoice
B unfair contractual terms and practices. that they procure within 30 information on these rates.
within 60 days, unless expressly days or, only in very exceptional
• ember States are encouraged
M
agreed otherwise and provided it You are not obliged to, but you have circumstances, within 60 days.
to establish voluntary codes
is not unfair to the creditor. the right to take these actions against • ontractual freedom
C of commitment for prompt
your debtor. in business to business payment.
• usinesses can also agree on
B
commercial transactions:
the late payment interest rate • he other European provisions
T
As a European business dealing with Businesses will have to pay their
provided it is not grossly unfair to against late payment remain in
commercial transactions in another invoices within 60 days, unless
the creditor. If nothing is agreed, force and have been revised to
Member State, this directive should they expressly agree otherwise
the statutory interest rate applies simplify ambiguous text and
make your life easier. From now on and provided it is not grossly
(at least 8 percentage points eliminate loopholes.
your Member State will make public all unfair.
above the European Central Bank’s
relevant information on late payment • usinesses are not obliged to, but
B
reference). • usinesses will automatically be
B
including the interest rate that applies have the right to apply the new
entitled to claim interest for
for the corresponding period. The measures. In some circumstances,
late payment and will also be
If you are a creditor: Commission, with the assistance of the a business may wish to extend
able to obtain a minimum fixed
In cases of late payment, you are Member States, will publish online the the payment period for some
amount of €40 as compensation
entitled to claim interest for the late interest rate for late payment. days or weeks to maintain a good
for recovery costs. They can
payment without a reminder. You can commercial relationship with a
also claim compensation for all
specific client.
remaining reasonable recovery
costs. • he new measures are obligatory
T
for public authorities. They must
• he statutory interest rate for
T
lead by example and show their
late payment will be increased to
reliability and efficiency by
at least 8 percentage points
honouring their contracts and
above the European Central Bank’s
paying on time.
reference. Public authorities are
not allowed to fix a lower interest • ember States may maintain
M
rate for late payment. or bring into force laws and
regulations which are more
• Businesses can challenge
favourable to the creditor than
grossly unfair contract terms
the provisions of the directive.
and practices more easily before
courts.

6. 10
Attend a national seminar
As part of the pan-European The content for each national
information campaign to raise seminar includes:
awareness of the issue of late
payment and support early • n introduction to the issue of late
A
implementation by Member States payment
of the Late Payment Directive, the
Directorate-General for Enterprise • n overview of the Late Payment
A
Industry is hosting a national seminar Directive
in each Member State of the European
Union. • n overview of business to
A
business (B2B) and public
These information seminars are an authority to business (PA2B)
opportunity for relevant parties to transactions
better understand the problem of
late payment in their country, and to • ransparency rules, unfair
T
receive useful information, training contractual terms and practices,
and advice about the combative and recovery costs
measures provided by the Late
Payment Directive, and other statutory • teps and instruments to
S
instruments. overcome late payment in
commercial transactions
There will be an opportunity to network
over coffee and a buffet lunch.
Further information on these events
and how to attend is available on our
Further information:
website
ec.europa.eu/enterprise/late-
Late Payment Information Campaign
payment-campaign ec.europa.eu/enterprise/late-payment-campaign
European Commission
Directorate-General for Enterprise and Industry
ec.europa.eu/enterprise
European Commission
Directorate-General for Justice
ec.europa.eu/justice

7. NB-30-12-817-EN-C
Promoting growth and employment are primary objectives for the European Union. Europe’s 23 million
Small and Medium Enterprises (SMEs) are the lifeblood of Europe’s economy, accounting for 99% of
businesses. Over the past five years they have provided two thirds of private employment and created
around 85% of new jobs. However, these are tough times for small firms; companies need a helping
hand to weather the storm. In order to support growth and job creation, the European Commission is
committed to making all necessary efforts to improve the business environment by a range of actions
including improving access to finance, reducing red tape, and improving regulation for a more efficient
internal market and to promote innovation.
European Commission
Directorate-General for Enterprise and Industry
ec.europa.eu/enterprise
bookshop.europa.eu
This campaign is financed by the European Commission.
doi:10.2769/53993