Combating late payment in commercial transactions (debate) 
President
The next item is the report by Mrs Weiler, on behalf of the Committee on the Internal Market and Consumer Protection, on the proposal for a directive of the European Parliament and of the Council on combating late payment in commercial transactions (recast) - C7-0044/2009 -.
Barbara Weiler
rapporteur. - (DE) Madam President, President-in-Office of the Council, Commissioner, ladies and gentlemen, first of all, I would like to thank the team of shadow rapporteurs from the Committee on Legal Affairs and the Committee on Industry, Research and Energy, my colleagues and everyone who contributed to this splendid result. Without constructive and fair cooperation with the Commission and with the Belgian Presidency, we would certainly not have achieved this result.
As rapporteur, I am - as you can imagine - very pleased with the result, firstly because we have made significant improvements in relation to the old directive, and secondly because we have introduced new ways to encourage better payment practices. We have achieved the goal. Well, I would prefer to say that the course has been set for improving the liquidity of SMEs, the small and medium-sized enterprises, and for securing investments in new products, new jobs and new processes.
Why was it necessary to improve this directive? The legislation from 2000 was non-binding and not very efficient. In recent years, payment practices in almost all Member States have deteriorated, and this happened even before the financial and economic crisis. The reform was also requested by the small businesses that expressed their wishes within the framework of the Small Business Act. They wanted payment practices in Europe to be organised in a considerably more efficient manner.
With regard to the results, I can say, firstly, that we have trodden a new path. We have strict rules. As a matter of principle, invoices must be paid within 30 days with few exceptions, and these must be justified. We have introduced a higher late payment interest rate of 8%. We have set the recovery costs at a completely non-bureaucratic fixed amount of EUR 40, and we have made it easier than it was previously for small businesses to assert their rights.
The second aspect to the new path, however, is the positive incentives and the new instruments, for example, the naming of customers with good payment practices, more information provided to small businesses concerning their rights, payment in instalments and the promotion of alternative dispute resolution mechanisms.
This legislation is also part of the 'better regulation' approach and it will also apply to the EU institutions. We are particularly proud of this, because - as I am sure you can imagine - not everyone was enthusiastic about it.
Of course, there were a few conflicts and I would like to mention some of these. Firstly, to start with, there were certainly major differences and a diversity of opinions in Parliament. The 100 amendments alone demonstrate that we first had to tussle together over this in Parliament, too. The Commission was certainly not always happy with our endeavours, including the extension of this to the business to business level, but I think that, overall, we have achieved a good result.
It was the Council that posed the problems. It is regrettable that the Council has not always fulfilled its objective of helping small businesses. I find that particularly regrettable for the relatively rich and well-structured countries like Germany and Austria.
With regard to the professional organisations, I can only say that they were constructive, even though we, naturally, did not always accept or were not always able to go with their opinions.
In summary, the next steps are that, after tomorrow's vote, we expect the Council to conduct a final positive vote and then the Member States will be able to implement this legislation. We do not expect it to take two years for this to be implemented. Instead, we expect the Member States to begin to transpose it into national law as early as January of next year.
Antonio Tajani
Madam President, I believe this debate brings an important period of work to a close. The Commission, Parliament and the Council have decided to join together in giving a specific response to small and medium-sized enterprises (SMEs) by implementing part of the Small Business Act. A directive will, I hope, be adopted tomorrow which will enable a great many SMEs in the European Union to breathe a sigh of relief.
The number of unpaid bills has been increasing for too long: last year, there was an 8% increase, and today bad debts total EUR 300 billion. This is a problem that leaves SMEs in extreme difficulties. They are often in danger of closing down because they cannot survive due to the failure by large companies and, especially, public authorities, to honour their commitments. I believe the Union's institutions are ready to give a positive response for the EU economy. When the legislation that we are about to adopt is fully in force, roughly EUR 180 billion will be put back into circulation, which means stimulating growth and innovation initiatives in favour of SMEs.
As you know, access to credit is key to the development and increased competitiveness of our businesses. I therefore believe that the decision to support this directive proposed by the Commission is of great importance to our economy, because it finally provides an answer to millions of European enterprises and gives hope to millions of workers who have jobs thanks to the existence of such enterprises, which form the backbone of our economy.
I would like to thank the Belgian Presidency for the important part it played in mediation, and I also thank all the Members of the European Parliament who have worked hard during this stage, starting with Mrs Weiler, Mr Baldassarre and Mr De Angelis, as well as all the shadow rapporteurs, who made it possible to find a positive solution.
As a result of the harmonisation of payment periods for public bodies, which will have to pay their invoices within 30 days, I think we will inject a substantial amount of extra cash into companies' coffers. These rules will also have the effect of strongly encouraging those public authorities that delay their payments to bring their management methods up to date as well. In fact, when a public body acquires goods or services, it has already included the funds for that spending in its budget. Therefore, it should not be difficult to pay its creditors punctually. It should also be emphasised that shorter payment periods will result in savings for the public authorities.
Another important point in the agreement is that businesses themselves will have to pay their invoices within 60 days, unless agreed otherwise between the parties on terms that are not unfair to the creditor.
In conclusion, I must point out that the Member States will remain free to keep or adopt provisions that are more favourable to the creditor than is necessary under the directive. Consequently, this legislative document does not prevent Member States from adopting shorter payment periods or harsher penalties.
Madam President, honourable Members, this new directive shows the Union's determination to give Europe's enterprises, and especially SMEs, a decisive boost to get through the economic crisis, which the Commission intends to tackle by means of a series of actions. We have just tabled the communication on innovation and next week, we will also table the one on the new industrial policy, and innovation and industrial policy cannot be put into practice without there being access to credit.
Tomorrow, Parliament, in agreement with the Council Presidency and the European Commission, will provide a concrete response to these expectations.
Francesco De Angelis
Madam President, ladies and gentlemen, I would like to thank Mrs Weiler for the excellent work she has done. With this provision, Europe is putting an end to a procedure that has brought a great many small and medium-sized enterprises (SMEs) to their knees. Parliament is taking action to protect SMEs - the most vulnerable businesses and the ones most exposed to the effects of the crisis - from problems of liquidity and access to credit. The current practice of delaying payments is pushing a great many small businesses towards bankruptcy, with adverse effects on employment.
That is why the provision is important: it sets the maximum payment period at 60 days, increases interest on late payments to 8% and outlaws the use of contractual terms that are unfair to the creditor. In other words, it lays down definite time periods, incentives and, most of all, no exceptions. These are measures designed to protect SMEs, stimulate our economic and productive fabric, and boost employment.
It is now the turn of the Member States to take swift and effective steps to implement this directive, which confirms that Europe exists, is useful and can make itself felt.
Raffaele Baldassarre
Madam President, Mr Tajani, Mrs Weiler, ladies and gentlemen, I am very pleased and proud to have contributed to the adoption of this directive on behalf of the Committee on Legal Affairs. It is a vital counter-cyclical measure which provides very real support to companies, especially small and medium-sized enterprises (SMEs), by laying down definite payment terms and appropriate penalties to encourage punctual payment by both public authorities and private enterprise in the European Union. If everyone involved paid their debts on time, the European economy would receive a cash injection worth EUR 300 billion.
Our market will not be common and our competition will not be fair until uniform rules are established that apply to everybody. That is the motivation behind the new directive on combating late payment: it forces public authorities to be more efficient and virtuous in their actions and helps the internal market and free competition to develop homogeneously, to the benefit of SMEs.
This House has been able to make a decisive contribution to this successful outcome by overcoming all kinds of pressure and divisions for the sake of the general good of the people and of the European production system.
Małgorzata Handzlik
Commissioner, fellow Members, I am pleased that, today, we can sum up the discussion which we have been having in recent months. Everyone involved in the work on the directive knows that reaching agreement was not easy, although all of the parties were aware of the importance of the problem.
I think the measures we are going to vote on tomorrow are good news for businesses and, in particular, for small and medium-sized enterprises, which are going to be able to have their invoices paid more promptly. The scale of the problem of late payment is not the same in every Member State. However, we should not forget that businesses operate in the common European market and often conduct their activities in different Member States. Business operators should have a guarantee that their invoices will be paid on time irrespective of whether it is Poland, Spain, France or Malta.
Ladies and gentlemen, I was asked by a journalist, today, if the directive has teeth and what principal instruments it has which will change behaviour in the market. Well, in my opinion, its teeth are to be found in the maximum and non-extendible 60-day settlement period for public authorities. It is extremely important that information about the directive's main instruments reaches business operators. They have to know that they are entitled to compensation for the costs of recovering due amounts, that payment deadlines have been shortened and that contractual provisions which rule out interest on late settlements, rule out compensation or contain unjustified extended settlement deadlines are, quite simply, dishonest. Only then will businesses make use of the directive's provisions and demand respect for settlement deadlines and other rights to which they are entitled. For payment delays should be the exception and not the rule. In my opinion, the directive is a strong signal from the European institutions that this is precisely how things should be. I would like to thank everyone for their cooperation and attention.
Bernadette Vergnaud
Madam President, ladies and gentlemen, I would first like to congratulate our rapporteur, Mrs Weiler, on her work and the remarkable compromise achieved with the Council, as the Commission's initial proposal had some major faults.
I would like to go back over four important points achieved in this directive.
First, I am very pleased that there is a guarantee in place on equal treatment of the public and private sectors. The Commission was expecting heavier sanctions for the public sector, even though the latter works in the general interest. This was the result of ignorance about the reality of the state of the Member States' public accounts, and could have resulted in a competitive disadvantage for public companies.
Another move forward is the extension of payment terms to 60 instead of 30 days for public health services, which have complex budgetary procedures forcing them to have longer payment terms, for which they cannot be held responsible.
Still on the subject of payment terms, it was essential to establish a ban on unfair contractual terms affecting creditors in contracts between companies, which often happens between a large group and a small and medium-sized enterprise.
Finally, and this relates primarily to the small and medium-sized enterprises which are victims of payment delays, the introduction of an 8% interest rate in the event of a delay and compensation to cover collection costs could encourage these companies to demand damages. Until now, they have tended to refuse to do so at the risk of this jeopardising anything.
I am therefore delighted to be able to vote on this bill which, I hope, will constitute real progress for the viability and good health of European businesses, progress that is needed not only for a more successful internal market, but also a fairer one.
Jürgen Creutzmann
Madam President, Commissioner Tajani, ladies and gentlemen, tomorrow, the European Parliament will adopt a directive on combating late payment that will make history. It is the first directive that can quite simply be explained in three sentences: firstly, public authorities will, as a matter of principle, have to pay within 30 days in future if no shorter payment targets have been agreed and if no special circumstances make a payment target of no more than 60 days necessary. Secondly, when agreeing payment targets, enterprises have freedom of contract within 60 days and payment targets of more than 60 days are no longer permitted, except if expressly agreed and if it does not pose a serious disadvantage to the creditor. Thirdly, if the aforementioned payment deadlines are exceeded, recovery costs of at least EUR 40 and interest of at least 8% above the European Central Bank base interest rate can be charged without a prior reminder.
This directive will help small and medium-sized enterprises in Europe to a great extent to improve their liquidity, and they will not need to accept as much credit from the banks. Debtors with a strong market presence will no longer be able to force small and medium-sized enterprises into granting longer payment deadlines, and that is a good thing. Furthermore, individual Member States will not only be able to retain shorter payment target deadlines in the form that has been customary up to now; we assume that, in fact, they will be retained, because we cannot imagine that the Late Payments Directive will lead to a deterioration in payment practices within the Member States.
Enterprises that do business within Europe know that, in future, their claims will be settled after no more than 60 days. This is a huge step forward and a further step towards the completion of the European internal market. We can be very satisfied with the adoption of this legislation. It will help small and medium-sized enterprises and it will help the European internal market.
Malcolm Harbour
on behalf of the ECR Group. - Madam President, on behalf of my political group, and also as the chairman of the Committee on the Internal Market and Consumer Protection, I want to thank Mrs Weiler in particular as the rapporteur, and also all the many colleagues from the committee who are here today, for a great example of teamwork. I include in that both the Council and the Commission.
There is a lot of talk about smart regulation at the moment, but I think this is a classic example of smart regulation. For a start, it goes to the heart of problems that many small businesses are experiencing in an economy in which they are finding conditions very difficult at the moment. We must insist that Member States implement this proposal as soon as possible.
Secondly, the Commission rightly analysed the problems and successes of the previous directive, and I want to remark here that this was the first directive where the agreement of the committee coordinators to invite the Commission to present its full impact assessment of any proposal was carried out to the full. We had a very comprehensive impact assessment which clearly identified the areas which needed to be changed.
Above all, the insistence now that public authorities in particular also have to conform to the standards applied to the private sector and cannot abuse their position against small suppliers by complying with these requirements, is absolutely central. This is the major achievement, and I particularly want to thank the Belgian Presidency - and I see that they are represented here this evening - because they resisted demands from some Member States to try and get themselves a carve-out from this 60-day requirement.
We said to the Belgian Presidency that there is no point whatsoever in having this directive if you allow this to happen. It is devoid of meaning if you let public authorities off the hook.
I think this is a good example of smart regulation, but may I just conclude by making two final observations. First of all, we must get this implemented properly and consistently in every Member State; and secondly, it must result in a change of culture which says that it is simply no longer acceptable for large customers to exploit small businesses by paying them late. I think this is what this directive will achieve.
Oreste Rossi
Madam President, ladies and gentlemen, first of all, I must thank Mr Tajani for his statement, which I endorse wholeheartedly.
It is all too common to find that public authorities themselves are bad payers, and they often cause otherwise healthy companies to fail and seriously damage the competitiveness of our firms. They can bring about a terrible chain reaction with major social repercussions which, in the end, may sometimes backfire on the public authority which gave rise to this trail of damage, through increases in prices, costs and, consequently, spending.
In view of all this, it is hardly surprising if a small business is forced into bankruptcy due to a lack of liquid assets, especially in periods of economic crisis and recession such as the one we are now experiencing. It has therefore been decided that severe penalties should be imposed for such late payments. The new parameters laid down in the adopted report include keeping contractual freedom in negotiations between private enterprises, but imposing time limits (30 + 30 days); setting the term within which public authorities must pay private enterprises at 30 days; and introducing a new rule for large corporations - such as those operating in the postal service, energy and transport sectors - which compete with private companies even though they are publicly funded, in that they are equated to private companies and are therefore subject to the rules of the private market.
It is now for the Member States to implement this provision as swiftly as possible so as to reinvigorate those companies that are still in difficulties today, as the Commissioner and a number of my fellow Members have emphasised.
Csanád Szegedi
(HU) Madam President, ladies and gentlemen, in view of the chains of debts which also affect and shackle the economy of Hungary, we should definitely welcome a regulation that facilitates the reinforcement of a stronger payment discipline and the predictability of financial processes, thereby contributing to an improvement in the situation of financial operators. On the one hand, the tabled amendments make the original proposal clearer, which is an improvement, and, on the other, as opposed to the original objectives, they weaken the dissuasive forces seen in the original proposal, especially on the part of the authorities. Derogation from the 30 days is particularly not allowed in the case of public authorities. We must apply a background regulation which makes this deadline possible. As regards sanctions, enterprises and authorities must be treated equally. The fundamental objective is the recovery of the economy and prompt payment in order to facilitate the financial stability of small and medium-sized enterprises. No provisions have been made to facilitate this in the proposal.
Abusing their significant market share and dominance, large multinational companies force their domestic partners into contracts stipulating 90 or 120 day payment terms, with possible notional sanctions if missed. However, the vulnerable supplier does not dare enforce the sanctions even when clearly supported by the law, for fear of losing orders. In order to avoid this, we should have statutory regulations in every case, stipulating mandatory late payment penalty charges, with fines to be imposed even on the creditor when such penalties are not charged. Thank you very much for your attention.
Andreas Schwab
(DE) Madam President, Commissioner, ladies and gentlemen, it is, of course, completely normal in the European Parliament to begin by thanking our fellow Members, but in the case of this directive, I believe that it is actually appropriate to start with this expression of thanks. First of all, I would like to thank Commissioner Tajani, who, in a way seldom seen before, accommodated the requests and the justified concerns of Parliament in the work of the Commission in an unbelievably open manner. This really was a very positive new development in the cooperation between the Council, the Commission and Parliament. In this regard, I can only endorse what has already been said about this: this is smart regulation and we could do with more of it.
However, I believe that we in the European Parliament were also able to help to enable this directive ultimately to end up in the Council with this result, which has already been described by many fellow Members as positive. Between the Committee on Legal Affairs and the Committee on Internal Market and Consumer Protection, we followed a common cross-committee strategy. We worked closely together, including across the group divide, and I must say that, as a representative of the European People's Party (Christian Democrats), I would like not only to offer my thanks, but also to express my respect for the rapporteur, Mrs Weiler, for the fact that - although at the start she had a different content defined - as rapporteur for this House, she ultimately represented the vote, the majority opinion of the Committee, in a very serious and very emphatic manner. Without that, this success would not have been possible, despite the significant work performed by the shadow rapporteurs.
Finally, I would just like to mention one point. There is one area that we have so far mentioned only very briefly and that is the EUR 40 that it will be possible, in future, to charge as a flat rate in the event of a late payment. I believe that when this measure is implemented in the Member States, when consumers get to know about it, we will have to attempt to explain this many times, because in the case of a completely normal delivery of goods, EUR 40 is actually a good means of preventing these late payments that we want to put a stop to in Europe. I believe that the Commission and the Member States will still have to exert their influence on public opinion in order to enable consumers to understand why this is necessary in the interests of small and medium-sized enterprises in Europe.
Alan Kelly
Madam President, I would like to thank the Commissioner for his excellent comments earlier on. This is excellent legislation, and I would like, in particular, to compliment my colleague, Barbara Weiler, on the manner in which she brought this through. It is absolutely fantastic work and an example of the type of good legislation that we can bring through. It will provide a better flow of money around our economies and therefore is good for business, small businesses and society in general. More importantly, it will help us with the big issue facing us all at the moment, which is the provision of jobs.
This directive will provide clear strong principles that can be communicated in markets and Member States to the effect that late payments will no longer be tolerated. This should create greater liquidity. Companies getting paid promptly are more likely to be able to avail themselves of credit, grow their businesses and generate and create employment. Furthermore, I know from recent insolvency court cases in my own country, Ireland, and particularly in the construction sector, that the many late payments end up becoming bad debts and bring companies to their knees. That has been the case for a company very close to me, and mass redundancies have resulted from this.
I also welcome the provision on positive naming. I think this is a good idea. It rewards good practice and creates incentives.
Let us not forget farmers. Farmers have been suffering from failure to receive payments in time from processors and supermarkets. The multiples have been winning. Hopefully, these laws will give them a stronger negotiating position so that this vulnerable group in the food chain can also be better protected.
Edvard Kožušník
(CS) To start with, I think that I first need to thank the rapporteur, Mrs Weiler, for the good work she has done, because initially, it was not easy at all. Nevertheless, I think that we can be satisfied with the final form.
Unlike the original Commission proposal, which seemed to me a little divorced from practice, this new amendment has managed to move closer to the reality that prevails in commercial and contractual relationships. The proposal also managed, in particular, to simplify and clarify what I consider a fundamental shift towards the better intelligibility of standards. If there is anything in particular that is worth highlighting, it is the fact that, unlike the original Commission proposal, we managed to retain the principle of contractual freedom in commercial and contractual relationships. At the same time, it is very good news that we managed to put through a provision which stipulates that European Union institutions have the same status as public authorities in the Member States. So, from now on, these institutions will have to pay on time, which will be particularly appreciated by the beneficiaries of European funding. I am also very happy that we managed to delete the very ridiculous provision that ordered public authorities which pay one day late to pay a flat penalty of 5% of the full amount owed in addition to the standard rate of interest for delayed payment. I do not need to emphasise the kind of impact that this provision would have on already strained public budgets.
Once again, I would like to thank the rapporteur and my colleagues for the amount of effort they have put into finding a joint compromise on the form of this report. I think that it was energy well expended.
Anna Maria Corazza Bildt
Madam President, I would very much like to join the chorus of thanks and congratulations, which are more than a mere formality this evening. I would like to thank Commissioner Tajani for his personal commitment, the Council for its flexibility and, of course, my colleagues, for reaching this compromise in first reading that is so important for us in business. In particular, I thank my friend Małgorzata Handzlik of the EPP.
Having been a businesswoman myself before entering this House, I am fully aware that late payment is a serious issue for small companies. Sometimes, it can lead to bankruptcy. Other times, at best, it can be a cause of uncertainty and can damage business.
Limiting the payment period for public administrative authorities to 60 days is, of course, a major achievement, since public authorities, as Commissioner Tajani has just said, simply have to process payments, so it is a matter of reducing bureaucracy.
I am also glad that we have introduced BtoB as small businesses now have a clear legal framework to enable them to make claims for late payment from big companies, something they at times did not dare to do.
I believe that we have found a good balance between respect for freedom of contract - which is all important - and providing small companies with the necessary tools to avoid being held hostage by bigger companies or public administration. Instead of spending their time chasing debts, they can now devote their resources to effectively exercising their right to receive payment, interest and compensation.
I believe this agreement should be a tool to deter late payments rather than a tool to enforce collection of late payments and, as Malcolm Harbour said, to really create a culture of paying on time which will make for a better functioning internal market and, of course, benefit all the stakeholders.
We have shown that Parliament can take concrete measures that can really make a difference, create more jobs and assist SMEs. Now, the overriding issue is for the Council and the Member States to assume their responsibility to make sure that these rules are properly enforced.
Sylvana Rapti
(EL) Madam President, my thanks to Mrs Weiler who has, I believe, given a helping hand to small and medium-sized enterprises throughout Europe and, hence, to Europe itself. At this critical time for the Union's economy, a very serious and substantiated effort is being made to strengthen small and medium-sized enterprises. We all know that late payments are often the reason why these companies go bankrupt and jobs are lost. We have managed, with a great deal of difficulty, coupled with an even greater willingness to compromise so that jobs can be saved, to broker what may be a rather harsh, but which is certainly a necessary and fair agreement.
I am sure you understand that, as a Greek, I personally take an even greater interest in and am especially concerned by this issue. The fact that Greece has agreed to payment margins which might be termed 'narrow' illustrates that we really are committed to turning round the situation in my country. The general 30-day payment rule means, in very simple terms, that our internal administrative auditing procedures for approving payments need to be changed. The 60-day exception, especially in sectors such as health, gives us a margin for handling chain payment procedures which are not always easy to audit.
I want us to succeed - and I believe that we shall - because we owe it to workers and businessmen in Greece and to workers and businessmen in Europe. We must give small and medium-sized enterprises a chance to work with more incentives and to create healthy growth.
Janusz Wojciechowski
(PL) The problem of prompt payment in commercial transactions also affects farmers and suppliers of agricultural produce. Very often, settlement deadlines are put off to very distant dates, and this is one reason why the economic situation of many farms is worsening. Farmers often do not receive timely payment for their produce.
In the recent Bové report, the European Parliament declared in favour of farmers and deemed that the maximum settlement period for transactions of this kind should be no longer than 30 days. We should strive for the effective introduction of this period into practice in all Member States of the European Union. Farmers should be protected from the dishonest practices of commercial enterprises and, in particular, those of the huge retail chains.
Mario Pirillo
(IT) Madam President, Mr Tajani, Mrs Weiler, the directive on combating late payment in commercial transactions is a powerful and important act of this House, which has become the spokesman for the just requests of Europe's small and medium-sized enterprises (SMEs), which have been suffering from late payment of their invoices for years. This is a very serious problem, which has hindered companies' development and, in some cases, has bankrupted healthy firms, which were already under pressure from the high interest rates charged by the banks.
Under the agreement reached on 13 September between Parliament and the Council, companies can now rely on definite deadlines by which they can expect their invoices to be paid, and these deadlines will have to be met by both public authorities and the private sector. The proposed directive will certainly improve cash flow for Europe's companies, which thus have an important legal instrument with which they can fully and effectively exercise their rights. I would not like to see this benefit for SMEs have an impact on purchase prices.
I hope the Member States will know how to react to the strong message being sent out by the European Union at this time of particular economic downturn by speeding up the transposition of the European directive into their national legislations.
Oldřich Vlasák
(CS) This necessary proposal for revising the directive on late payments, which we have been discussing today, is decidedly better than the original proposal. I regret, however, that in the final compromise, we did not manage to ensure equal status for all parties and to maintain a level playing field both for public and for private entities. While the payment periods for contracts between businesses should, in principle, be limited to 60 calendar days - and this period may be extended in exceptional cases - in the case of contracts with public authorities, including municipalities and towns, the periods should not exceed 30 calendar days. This seems to me to be wrong, because all players should operate under the same conditions.
The justification that public authorities are at an advantage in that they can obtain financing on more attractive terms than businesses, or are less dependent on building stable relationships, may be valid for national authorities or European institutions, but is definitely not valid for most smaller towns and rural municipalities, not only in the Czech Republic, but throughout Europe. The resulting proposal is therefore largely discriminatory towards such smaller towns.
Lara Comi
(IT) Madam President, ladies and gentlemen, I personally agree with the need to strengthen Directive 2000/35/EC and to identify the instruments needed to put an end to, or at least significantly reduce, late payment in commercial transactions.
The economic and political consequences of late payment on national markets and especially the European market are obvious to everyone. The ongoing economic recession has worsened the situation, damaging competitiveness and profitability even further and posing a serious threat to the survival of small and medium-sized enterprises (SMEs), which form an essential part of the European market, create wealth and play a decisive role in creating jobs.
This political choice by the European Commission is a step in the right direction, the same one that Mr Monti referred to in his report when he spoke of the need to intervene to make the business climate more favourable for SMEs. As for whether the public authorities will comply promptly or whether the 8% interest rate will act as a deterrent, I cannot hide the fact that I am somewhat doubtful as to the outcome, when I think of certain regions in my own country and other Member States that will really struggle to comply with the new rules.
I hope that this new approach can be a real opportunity for change. Now it is important to monitor the transposition of the directive into the various internal legal systems, with the involvement of regional and local authorities, to ensure that it is carried out uniformly everywhere.
Regina Bastos
(PT) Madam President, Commissioner, ladies and gentlemen, I would like to begin by congratulating my fellow Member, the rapporteur, for her work, as well as thanking all those who worked with her on this report, which has allowed this agreement to be reached at the first reading.
Everyone here recognised that the present directive, which recasts the previous directive that is more than 10 years old, aims to put an end to a widespread problem: the European Union and late payment. Such delays are unreasonably long in some Member States when they involve public administration. This practice has massive negative effects on economic life, whether in terms of small and medium-sized enterprises or the internal market, and they cannot be tolerated any longer, especially given that we are experiencing the kind of economic and financial crisis that we are at present.
This legislative amendment brings coherence and sense to the plan for reviving the European economy and implementing the 'Small Business Act'. This directive is sure to improve the liquidity of companies. Creditors will have an effective and efficient tool for exercising their rights against 'bad payment behaviour'. With this directive in place, reprehensible practice by public entities will be the exception. Public administrative bodies should set a good example by paying their bills for goods and services within a month. Now it is up to the institutions involved, the Council and the Member States to ensure that the transposition of this directive is carried out as swiftly as possible.
Sari Essayah
(FI) Madam President, Commissioner, small companies frequently suffer from financial difficulties owing to late payment, and in the present economic situation, delayed payments can even mean bankruptcy for suppliers of goods and services, due to poor liquidity.
An agreement has now been made with the Council to update the Late Payments Directive, which would set a general deadline of 30 days for payments between businesses and public corporations. In my view, however, it is also important to recognise a general freedom of contract in business transactions between enterprises, and that is why I think that it is a good idea if payment periods in business transactions between companies can also be extended to 60 days, if that is the view of both parties.
The prospect of extending payment periods for public authorities is a more limited one, and late payment in public administration, in particular, has become a huge problem in some EU countries. In Greece, for example, the average payment period has had to be stretched to as much as 165 days (although things are getting better, as our Greek fellow Member pointed out here). In Spain, it is 138 days, and in Italy 128.
Late payment has meant that finance companies have come to benefit, because businesses have been forced to sell their accounts receivable to speed up their revenue cycle. These financial services cost money, and we need to point out that companies have a basic right to receive the money owed to them without having to pay any middlemen and incurring additional costs.
The agreed interest for late payment, the reference rate plus 8%, is acceptable, but the EUR 40 minimum recovery charge might become seen as excessive for small and, for example, repeat deliveries. We have to remember that arrears charges must be reasonable, which is to say, tied to the reasonable costs that the creditor has actually incurred. Despite these marginal comments, the Late Payments Directive will certainly be of most benefit mainly to small and mediumsized enterprises.
Elena Băsescu
(RO) In an unstable economic environment, late payments have an adverse impact on SMEs. Improving the system in this respect is an ambitious objective, but it is also necessary to ensure that employees and suppliers are paid on time. The new regulations on late payment in commercial transactions should facilitate and speed up the process for companies to recover the money they are due. I believe that all the parties involved must be on an equal footing and the rules must apply to all.
During the last three years, more than 30 000 SMEs have ceased operating due to financial deadlock. One of the causes is late payment by the state for products and services.
I wish to end by expressing my support for this proposal for a directive which encourages better supervision and evaluation of the commercial transactions system.
Zuzana Roithová
(CS) I have no doubt that tomorrow, we will pass this revised directive and thus open the way to a new business culture where early payments are common practice and late payments incur harsh penalties. In particular, smaller entrepreneurs will appreciate the fact that state authorities and institutions linked to the state budget will also no longer owe money for many months for goods and services, and will perhaps pay within 30 days.
I am pleased that the Council has agreed with the new fee of EUR 40 for recovering payments, and also supports an increased interest rate on arrears of 1% compared with now. I just think that it is not feasible when recovering minimal amounts which are due more to errors and which do not have a visible effect on the ability of companies to pay. Fortunately, this does not relate to late payments by consumers.
I am pleased that my Committee and the Council have agreed with the fact that it is not possible to introduce a dual system of penalties for the private and public sectors, as the Commission proposed. I noted the paradox that, for example, hospitals would have to pay their private creditors higher penalties than they themselves could require of their debtors. This change creates a high quality instrument, and I congratulate Mrs Weiler.
Csaba Sándor Tabajdi
(HU) Ladies and gentlemen, I welcome the report by Mrs Weiler, which aims to eliminate loopholes and create fair commercial morals in the European Union, but let us not have any illusions. This is a necessary, but not sufficient measure, as we are all aware of the ways in which dominant companies can exercise pressure. This is a very important and necessary measure, but it is not sufficient. Further control is very important, since it is well-known that small enterprises, including those in the agricultural sector, are particularly disadvantaged within the food supply chain, as also mentioned in the Bové report. They are exposed to the dominance of buyers and large chain stores. Mrs Weiler's report brings an important contribution to this as well, but further efficient monitoring and control are required. Thank you for your attention.
Luís Paulo Alves
(PT) Madam President, in many Member States today, there is a wide disparity as regards the payment terms to businesses, especially when the state, small and medium-sized enterprises, and large companies are involved. Those of us who come from business know that in the current economic crisis, and with the growing difficulties in financing, companies are increasingly struggling with liquidity problems, and that in many Member States, they are even exposed to an increased risk of bankruptcy.
It seems clear that the existing directive, which attempted to regulate this matter, had a limited effect, and the proposal that we are analysing now represents an important step in meeting the deadlines for payment, not only in relations between the companies and public bodies, but also - and this is crucial - in the relationships that companies establish with one another. We now have legislation that offers us greater added value, with a clear system of penalties for late payment, and that also represents an effective improvement in counteracting abuse by the state and large companies of their dominant position.
Jaroslav Paška
(SK) The legal environment in the Member States in the area of debt recovery varies. Experience with the promptness of payment for goods or services supplied therefore also varies in the Member States.
However, we have one thing in common - late payments create enormous problems for small and medium-sized enterprises. In my own country, there are two groups of investors who quite often fail to comply with deadlines for paying invoices. The first group comprises public bodies at various levels, from local authorities to municipal authorities and regional bodies, all the way up to the state. The second group are the large foreign contractors who often get small sub-contractors into impossible situations, particularly in the construction and agricultural sectors. Small firms usually do not have the sort of financial reserves that would allow them to pay their employees for several months without receiving payment for work carried out. Let us all hope, therefore, that the new directive will bring the expected improvements, and that the deliberate holding back of funds will become a thing of the past in the European Union.
Giovanni Collino
(IT) Madam President, Mr Tajani, ladies and gentlemen, small and medium-sized enterprises (SMEs) in Italy and throughout Europe are suffering terribly from the effects of the crisis. They are the ones that struggle most every time they have to deal with a large debt, since it is more difficult for them to put up security. They are the ones that most need to have liquid assets available, since they have less capital that they can make grow. They are always the ones that first find themselves overwhelmed by market difficulties, as they cannot leverage diversification so much. It is in their interests, above all, that we will be voting tomorrow on the report on the proposal for a directive on combating late payment.
Public authorities are there to serve the citizens and their interests, which, in this case, are economic interests. It is in line with these interests that administrative procedures must be designed, established and implemented to respect and value the efforts of those who are responsible for the future of as many families as there are workers employed in a company.
Thanks to the European Parliament, from tomorrow, SMEs will be better protected against those opposite numbers in the public and private sectors that, hitherto, have relied too heavily on being able to put off paying their bills. In conclusion, Madam President, I would like to thank the rapporteur and Commissioner Tajani for their commitment.
Monika Flašíková Beňová
(SK) Anyone who has ever been in business or has been involved in commercial activities will know what complications can be caused by something as trivial as late payments.
I applaud the approach taken by the rapporteur, and I agree with her assessment of the proposal from the Commission, and with her views on amendments and additions. On the other hand, it might help the matter if more measures were drawn up that would provide a positive incentive for those involved in commercial relations and encourage them not to delay payments. For example, support could be given in the European Union Member States for the use of a Prompt Payment Code, or the publication of some kind of White List of good payers. It is simply necessary to consider not only sanctions in case of late payment, but also to try preventatively to develop an informal culture of early payment.
Peter Jahr
(DE) Madam President, with the new regulation of late payment in commercial transactions, we can bring about a real improvement for all businesses in the European Union. For small businesses in particular, it is unacceptable to have to wait several months for invoices to be paid. I am therefore very pleased that today, we intend to lay down fixed payment deadlines and reminder charges for both private and public contracting authorities. With this Europe-wide harmonisation, we will really help to improve commercial transactions throughout Europe, which will benefit small and medium-sized enterprises in particular.
We must now tackle the black sheep of the industry. The black sheep are those who, at the time they place the order, already know very well that they will never pay for it.
Antonio Tajani
Madam President, I think the debate has shown Parliament's willingness - albeit with a variety of nuances - to support this new directive, which will provide concrete responses for small and medium-sized enterprises and millions of Europeans who are expecting the Union's institutions to help them keep their jobs.
Since I was a Member of the European Parliament for many years, I must say I am delighted with the enormous effort made by the whole of Parliament, and particularly the rapporteurs, to move swiftly to adopt such an important piece of legislation. I would like to thank the Presidency and all those who have collaborated: the Commission staff, my office, the Belgian Presidency's staff and the parliamentary assistants.
We cannot sit back, however, as someone suggested, but must make sure that these rules are adopted quickly by the Member States, which have 24 months at most to do so, although we hope some of them may take less time. I also assure you that the Commission will continue to closely monitor the ways in which the directive is transposed and implemented, and will take care to submit a report to Parliament according to the established timetable.
I thank you once again for your cooperation with the Commission and for the extraordinary result we have achieved in such a short time.
Barbara Weiler
Madam President, ladies and gentlemen, when we discuss this matter back home in our electoral districts, I believe we will all find that we receive a great deal of support - something that is not a foregone conclusion where European dossiers are concerned - because this issue of late payment as a whole is not merely criticised back home; it is considered by everyone to be a given that payments should be made on time. That is the case irrespective of which party someone belongs to, and it is not dependent on what branch of industry you talk to, either. So we have broad agreement. I would also like to thank my fellow Members who have indicated their agreement with this result this evening.
I would like to mention three more aspects. As I said at the beginning of the debate, we will set the wheels in motion tomorrow. However, we will have to look very closely at whether the relaxations that we have introduced for micro-businesses, for agricultural undertakings, for example, and for artisan companies, are actually sufficient to enable these enterprises to obtain the money they are owed. We will have to examine very carefully how the limited freedom of contract will work. That is something new in the European internal market that we are now going to try out and that all of us also more or less support. We will need to examine whether the 8% late payment interest rate is adequate; Parliament would have liked it to be 9%. We will see how it works, and I would like to ask the Commission to pay close attention in order to ensure that, during the process of implementation, the Member States do not water down the directive.
I also see definite success on the horizon. I have heard that Spain has already produced new national legislation following our methods, and I know that the same is true of other Member States. In any case, our Committee will monitor the situation or carry out an impact assessment according to a directive, so that the Member States also know that, when the parliamentary term comes to an end, we will know who has implemented the improved payment practices as we intended and who has not. I would like to thank everyone who has contributed to this result, including the Belgian Presidency, which has perhaps not received enough recognition for its contribution. We know how efficiently and constructively you conducted the negotiations - a small country, but I would say a country with very intelligent and efficient methods for achieving results in Europe.
President
The debate is closed.
The vote will take place on Wednesday, 20 October, at 12:30.
Written statements (Rule 149)
Cristian Silviu Buşoi
The directive on combating late payment provides an essential instrument for establishing a proper and fair relationship between public authorities and small and medium-sized enterprises. Once this directive has come into force, it will punish authorities which are bad payers and offer business people important leverage for recovering their debts.
Such legislation was a necessity in order to balance the market and offer the private sector guarantees that the authorities are a player with equal powers, which can be held to account when they break the rules of the game. The directive offers a reasonable timeframe of 30 days for making payments, with derogations of up to 60 days in special cases such as hospitals, not to mention compensation and late-payment interest.
Although the form of the directive which was voted on is more lenient towards authorities which are bad payers than the European Commission's initial proposal, it offers adequate support both to small and medium-sized companies and to large companies which, in many European Union Member States, encounter difficulties in recovering their money for the services they have provided.
I am disappointed that the 5% penalty has been removed. However, I see this backward step as a strategic means of winning the support of as many EU countries as possible during the Council debates.
Robert Dušek
The report on action against late payments aims to improve the functioning of the internal market, to improve payment ethics, and to support the ability of small and medium-sized enterprises to pay. The current trend is to pay the invoice immediately before it is due or when it is overdue. The measures contained in the proposal submitted could lead to a new business culture in which timely payments are the rule and late payments are considered to be an unacceptable abuse of the customer and a breach of contract. A new rate of 1% could be imposed for reimbursing the costs of recovering late payments - for individuals, businesses and public authorities - whereas in the event of late payments of individual instalments, the interest rate and penalties would be calculated exclusively for late payments. A fixed period of 30 days is proposed as the payment period. Exceptions are allowed only in special circumstances. Here, it is necessary to define clearly what counts as a special circumstance. The rapporteur proposes setting a period of 60 days as the maximum payment period for public authorities, which I fully support. The interest on late payments should be progressive in order to motivate the debtor to pay the amount due as soon as possible. The legalistic approach, including penalties, should, in my opinion, be supplemented further by so-called soft measures by the Member States: for example, the promotion of electronic invoices, the adjustment of payment regimes for a large volume of work or services or positive publicity.
Diogo Feio
The Commission on Sustainable Development (CSD) has long been fighting a battle to turn the state into an upstanding citizen when it comes to fulfilling its obligations. Back in February this year, a draft law by the CSD was approved in Parliament which establishes that the state is to begin paying default interest when the delay in payment exceeds the limits set out in the contract or in law (30 or 60 days). The CSD has also been advocating the possibility of compensation of claims between state debts to companies and corporate debts to social security or the tax authorities for several years, attempting to make life easier for companies that, not being paid by the state, are still being confronted with the obligation to pay its social and tax contributions. We are therefore completely on board with the text that has now been approved, and which will establish an average period of 30 days for the state to pay its debts to suppliers. This term may be extended to 60 days in specific cases. It will also establish the obligation to pay default interest for late payment These are rules based on absolute justice, and they can help to alleviate the situation of many companies, especially small and medium-sized enterprises (SMEs).
Liem Hoang Ngoc
I would like to thank Mrs Weiler for this high quality report and the outcome of the negotiations with the Council, as the first reading agreement includes all the key elements that were put forward by the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament and which were approved in the vote in the Committee on the Internal Market and Consumer Protection.
I am especially pleased to see that private companies and public authorities are now placed on an equal footing. The Commission's initial proposal contained far more stringent penalties for public authorities, a position which our group felt was unacceptable as, unlike private undertakings, public sector bodies are not focused primarily on profit but rather operate in the general interest.
The fact that the lender is entitled to compensation for recovery expenses also represents real progress since, up to now, many companies, particularly SMEs, have chosen not to reclaim late-payment interest from borrowers for the simple reason that the cost of the relevant procedures outweighed any financial gains.
Finally, the maximum payment period of 30 days set out in the text seems reasonable, given that there is some scope for flexibility, notably for public healthcare bodies, a point that our group deemed particularly important.
Sandra Kalniete
in writing. - (LV) At a time of economic crisis, we must carry out reforms to improve the environment for business, because that is our best opportunity to stimulate the economy by the most direct means, thereby creating new jobs. The directive on combating late payment in commercial transactions is one of the most positive examples of this type. Late payment for the receipt of goods and services is a practice that is noticeable in Member States. Furthermore, on several occasions, it is public bodies, which should theoretically have no problems in settling bills, that act in this way. This is a significant impediment to the activities of businesses and prevents them from developing. This sort of practice must be brought to an end. The biggest winners from this directive will not only be businesses that operate wholly within the borders of a particular Member State but also especially small and medium-sized enterprises, which will be able to export goods and services to other Member States without needing to worry that they will need to wait several months to be paid. All European consumers will, for their part, be winners from the increased competition and supply that the new rules will ensure. The directive is a significant step towards the improvement of the payment culture in Europe. By taking these sorts of decisions, we are building a Europe that is an attractive place for investors and our own businesses. It is also essential for us going forward to take courageous decisions to encourage development.
Pavel Poc
In many EU Member States, it is common practice for invoices of ninety days and longer to be requested by the public sector and large businesses. Small and medium-sized enterprises therefore serve as banks for public corporations or large businesses. The internal debts of small and medium-sized enterprises accumulate, giving rise to an economic poison in the form of invoices with long payment periods which are hard to enforce. This reinforces economic inequality and also significantly reduces competition. Small and medium-sized enterprises are forced to cover long payment periods with credit, which they always get under worse terms than could be obtained from banks by large firms or the public sector. The new conditions and rules for all parties significantly help small and medium-sized enterprises to defend themselves against this disguised credit. The fixed interest rate for late payments, proposed at 8%, is an adequate deterrent for large firms too, the fixed 30-day payment period is balanced for supplier and purchaser, and the 30-day delivery verification period prevents abuse of the verification procedure for extending the payment period. Above all, as regards the European rules, they prevent the public sector and large companies from distorting the legislation adopted at a national level in the Member States. I sincerely thank the rapporteur for this extremely valuable report and excellent result.
Debora Serracchiani
I welcome the proposal for a directive, which represents a decisive step forward in relation to the directive currently in force. Once transposed nationally, regionally and locally, it will appreciably improve payment, particularly by public authorities, to companies, especially small and medium-sized enterprises, which will be able to count on having a more secure cash flow.
In many countries in Europe, when the public authorities are in a difficult situation, they are known to generally pay late and very often cause some companies to go bankrupt. A glaring example is Italy where, by the end of 2009, the public authorities were in debt to companies to the tune of approximately EUR 60 billion, and the payment delay averaged 186 days, with extremes of 800 days. One need only think of the amounts owed to the hotels that took in the survivors of the severe earthquake that hit the Abruzzo region in April 2009.
