Late Payment: SME representatives discuss the impact of bad payment behaviours in event at EESC

In the context of the ongoing discussion on the revision of Directive 2011/7 on combating Late Payment, the employers’ organisations PIMEC (Catalonia) and Confartigianato Imprese (Italy), members of SMEUnited, and the Plataforma Multisectorial contra la Morosidad (Spain) organised an event titled “Fighting late payments in Europe: recent progress and way forward” at the European Economic and Social Committee on 3 July.

The debates aimed at discussing how late payments remain one of the major problems that affect SMEs all over Europe. Indeed, thousands of companies suffer late collection terms that damage their finances and cut on their profit margins, thus placing millions of jobs at risk, with inflation worsening further the situation. EBC was invited to provide insights on late payment in construction, one of the sectors most heavily impacted by such practice in Europe and an obstacle to its green and digital transition.

Our Secretary General Fernando Sigchos Jiménez reminded that construction is made of long value chains, with too often an imbalance of power between main contractor and subcontractors, but also between public authorities and construction SMEs. After describing some deliberate ways of circumventing the law in B2B and PA2B commercial transactions, he reminded the main requests from construction SMEs and crafts in the EBC position paper on the revision of the Late Payment Directive:

• Apply a zero-tolerance policy regarding long payment terms and late payment;
• Define an obligatory maximum period of payment not exceeding 30 calendar days for all commercial transactions
• Define an obligatory maximum duration of 30 calendar days to ascertain the conformity of services or goods;
• Provide a clear definition of what is considered unfair contractual terms;
• Ensure subcontractors can directly claim payment from the contracting authority as foreseen in the Public Procurement Directive;
• Enforce better legislation on late payment and enforce administrative sanction;
• Allow SMEs to offset tax and social security debts against any outstanding amounts owe to SMEs due to late payment by public authorities;
• Set-up and enable mediation and arbitration measures at the regional and local level;
• Reinforce the transparency on payment practices.

The European Commission announced that its LPD revision proposal will be made public on 12 September, which will be based on three pillars: preventing late payment stemming from abusive contractual practices; increasing enforcement; and empowering SMEs to take action without fear. Additionally, the specialised company Intrum presented the main findings of its European Payment Report 2023.

EBC closely monitors the developments regarding the revision of the LPD as it represents a unique opportunity to produce structural changes in the construction sector and in the Member States most affected by late payment.

To read the full EBC position paper on the revision of the Late Payment Directive, click here.