European legislation: key amendments to the Late Payments Directive
On October 20, 2010 the European Parliament adopted a series of amendments to the EU Late Payments Directive. These amendments will affect both suppliers and purchasers of goods and services in the public and private sectors.
The following key points of the text as voted by the European Parliament are the following:
- For public to business payments, the standard deadline for bill payments is set at 30 days. However, in “exceptional circumstances” the sides may expressly agree to extend the deadline for up to 60 days.
- For business to business payments, the deadline is set at 30 days unless otherwise specified.
- Member States are free to decide to set up a standard deadline for up to 60 days for public healthcare facilities.
- The interest rate applicable to late payments will be the reference rate plus at least 8%.
- The creditor is entitled to a fixed sum of a minimum of EUR 40 as a compensation for recovery costs.
The likely impact of this revised Directive will be to help small to medium sized supplier businesses, particularly those with limited bargaining power, in securing early payment. It will also help in avoiding the potentially significant costs resulting from the continual need to chase for late payments.
