BUSINESSES should have their bills paid by national authorities and other businesses within 30 days under new rules agreed by the European Parliament.
The decision was welcomed by business organisations as a major help to SMEs especially those who are having a tough time in the current economic climate, but member states have up to two years to introduce the legislation.
Businesses can agree to exceed the 30-day limit between themselves while member states can extend the deadline up to 60 days for healthcare providers – often the worst offenders.
Those failing to meet the new payment deadlines can be automatically charged interest rates of 8% above the ECB reference rate and have to pay recovery costs.
Eurochambres, representing chambers of commerce across the EU, said the legislation is crucial to eradicate Europe’s late payment culture which causes cashflow problems for so many businesses. However, the body would have preferred if the agreement was limited to public authorities paying with taxpayers money and excluded business-to-business transactions.
Secretary general Arnaldo Abruzzini said the agreement was acceptable since it allows businesses to agree on payment periods longer than 60 days if it was agreed in advance and not grossly unfair to the creditor.
For public to business payments, the general deadline is 30 days but, if the two parties wish to extend this, it has to be expressly agreed and justified and may under no circumstances exceed 60 days.
The deadlines, when they become operational throughout the EU, are estimated to increase liquidity for business by €180bn.
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