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Late payments: Anticipating changes in European Community law
The Directive adopted on 20 October 2010 by the European Parliament provides a new state of affairs and reduces payment deadlines to 30 days for most commercial transactions. The objective of the Directive concerning combating late payments in commercial transactions is to ensure better protection of creditors whilst at the same time respecting contractual freedoms.
In particular, the new provisions of the Directive make provision for:
- Harmonisation of the deadline as far as the payments of public authorities to enterprises are concerned: the public authorities will have a period of 30 days to settle invoices for purchases of goods and services, or 60 days under exceptional circumstances;
- Contractual freedom for commercial operations between enterprises: enterprises will have to pay their invoices within 60 days unless they agree otherwise, and provided that the other terms are not manifestly excessive;
- Enterprises will automatically have the right to claim payment of late payment penalties and will also be able to receive a minimum lump-sum amount of 40 Euros with a view to covering their collection costs;
- The official interest rate for late payment will be raised to at least 8 percent higher than the Central European Bank’s reference rate. Public authorities will not be able to set a lower interest rate for late payments;
- It will be possible to contest manifestly excessive conditions more easily;
- Member States will have to publish the official interest rates for late payments in order to ensure transparency in relation to enterprises;
- Member States will be able to maintain or bring into force legislation and regulations that are more favourable to creditors than the Directive’s provisions.
The Directive will have to be transposed into the domestic law of the Member States within 24 months of the date on which it was adopted.
This new legislation updates the current European Union Directive concerning late payments. The standard deadline for paying an invoice for goods and services will now be 30 days for the public and private sectors.
Elodie-Aurore VALETTE
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