EU proposes governments pay bills within 30 days
The government and its agencies will soon have to start paying its dues in less than a month from the receipt of an invoice if new proposals by the European Commission are approved by member states and the European Parliament. According to the...
The government and its agencies will soon have to start paying its dues in less than a month from the receipt of an invoice if new proposals by the European Commission are approved by member states and the European Parliament.
According to the Commission, late payments are still a major problem affecting many businesses, particularly small ones, which can also lead to bankruptcies. The EU executive is now suggesting a revision of the late payments directive, originally approved in 2000, to include stricter rules. Many Maltese businesses are severely affected by late payments and a number have had to take legal action against the government to claim their dues.
European Enterprise and Industry Commissioner Gunther Verheugen, who is spearheading this initiative, said that the new directive proposes the introduction of a 30-day time limit at European level that public authorities would have to comply with when settling their invoices. In order to set an example, the Commission would be setting itself the same objective as of October.
Late payments in the EU amount to around €1.9 billion, according to Mr Verheugen.
According to statistics, one quarter of insolvency cases in Europe can be explained by excessively late payments.
The European commission is aiming for the new rules to take affect in autumn 2010 at the earliest.
According to the proposals, the maximum limit of 30 days recommended for payments made by public authorities, including the government, will run from the date when the invoice is received or from the final delivery of goods, supplies or services.
Nonetheless, the directive will still permit some leeway as a longer payment time could still be fixed on condition that the decision is taken by common accord between payer and payee, and that any delay is duly justified by specific circumstances, such as a genuine need to plan payment over a longer time period.
Mr Verheugen specified that this possibility only exists when a contract is the subject of several calls for tenders involving the need for staggered payments. Whatever time is fixed, a company will, however, be entitled to call on a public authority for compensation equivalent to five per cent of the amount due.
A company will be entitled to ask its client, whether business or public authority, for compensation for costs incurred due to late payment and to recover the amounts not paid.
This compensation will depend on the amount of the late payment: €40 for payment unpaid under €1000, €70 for a sum of between €1000 and €10,000, and one per cent of the total amount when the late payment is for more than €10,000.
According to the Commission, late payments are still a major problem affecting many businesses, particularly small ones, which can also lead to bankruptcies. The EU executive is now suggesting a revision of the late payments directive, originally approved in 2000, to include stricter rules. Many Maltese businesses are severely affected by late payments and a number have had to take legal action against the government to claim their dues.
European Enterprise and Industry Commissioner Gunther Verheugen, who is spearheading this initiative, said that the new directive proposes the introduction of a 30-day time limit at European level that public authorities would have to comply with when settling their invoices. In order to set an example, the Commission would be setting itself the same objective as of October.
Late payments in the EU amount to around €1.9 billion, according to Mr Verheugen.
According to statistics, one quarter of insolvency cases in Europe can be explained by excessively late payments.
The European commission is aiming for the new rules to take affect in autumn 2010 at the earliest.
According to the proposals, the maximum limit of 30 days recommended for payments made by public authorities, including the government, will run from the date when the invoice is received or from the final delivery of goods, supplies or services.
Nonetheless, the directive will still permit some leeway as a longer payment time could still be fixed on condition that the decision is taken by common accord between payer and payee, and that any delay is duly justified by specific circumstances, such as a genuine need to plan payment over a longer time period.
Mr Verheugen specified that this possibility only exists when a contract is the subject of several calls for tenders involving the need for staggered payments. Whatever time is fixed, a company will, however, be entitled to call on a public authority for compensation equivalent to five per cent of the amount due.
A company will be entitled to ask its client, whether business or public authority, for compensation for costs incurred due to late payment and to recover the amounts not paid.
This compensation will depend on the amount of the late payment: €40 for payment unpaid under €1000, €70 for a sum of between €1000 and €10,000, and one per cent of the total amount when the late payment is for more than €10,000.