Payment of invoices, in a maximum of 30 days in the B2B and B2G relationship

Small and medium-sized enterprises and large companies in the B2B relationship, but also public authorities in the relationship with companies will have a maximum payment term of 30 days for the payment of invoices, if the proposal to amend the Regulation on late payments prepared by the European Commission will pass in the following days of the plenary session of the European Parliament in the form proposed by the Community Executive and approved by the members of the Internal Market and Consumers Committee (IMCO).

According to the proposal of the European Commission, approved by the IMCO committee, article 3, paragraph 1 establishes: "In commercial transactions, the payment term cannot exceed 30 calendar days, from the date of receipt of the invoice or an equivalent request for payment by the debtor, with provided that the debtor has received the goods or services in accordance with the contractual agreement. If the date of receipt of the invoice or equivalent request for payment is uncertain, the payment period cannot exceed 30 calendar days from the date of receipt of the goods or services. This period applies both to transactions between enterprises and between authorities and public enterprises".

However, the IMCO Committee within the European Parliament introduced two amendments that would further reduce the impact of such a regulation on the cash-flow of small and medium-sized companies, which would risk, in the case of the strict implementation of the European Commission's proposal, being decapitalized and face great financial problems.

Thus, through paragraph 1a, the European deputies claim that in commercial transactions between companies, if it is expressly agreed in the contract, the payment period mentioned in paragraph (1) can be extended up to 60 calendar days (n.red .- i.e. the maximum payment term originally existing in the Later Payment Directive).

According to paragraph 1b also introduced by MEPs, by way of derogation from paragraph (1), in transactions between companies for the purchase of slow-moving or seasonal goods, the payment period can be extended up to 120 calendar days from the date of receipt of the invoice or of an equivalent demand for payment by the debtor, provided that the debtor has received the goods.

Article 2 paragraph 1, item 9b provides that "slow-moving goods" means goods in the possession of the retailer, from the actual supply by the manufacturer or wholesaler to the final retail sale, on average more than 60 days.

With regard to the expression "seasonal goods", according to point 9c of the same article, this means goods whose demand increases significantly on a regular basis during certain periods or seasons of the year.

The IMCO Committee also requests in the proposed amendment that, before the date of application of the new directive, the European Commission adopts and publishes technical guidance documentation on the practical details for the application of paragraph 1b, in relation to goods falling under the definition of moving goods slow and the definition of seasonal goods. Such technical guidance documentation will address the divergent payment practices put in place by different economic operators which constitute a risk of fragmentation of the internal market.

The future European normative act also has provisions for the benefit of creditors, especially for the benefit of creditor companies.

Thus, according to art. 5 paragraph 1, in case of delay in payment, the debtor shall pay the creditor interest on delay, unless the debtor is not responsible for the delay in payment, and according to paragraph 3 of the same article, the creditor cannot waive his right to obtain default interest when the debtor is a public authority or a large enterprise.

In other words, all public authorities, administrative-territorial units, public institutions and large companies will not be able to be exempted from the obligation to pay interest on late payment in case of exceeding the 30-day deadline for payment of invoices issued and received, interest that will begins to be calculated from the day following the expiration of the contractual or legal payment period.

In addition to the respective interest, the normative act also provides for the creditor's receipt of the debtor's right to a lump-sum compensation to cover the costs of debt recovery. The value of this compensation is 50 euros for each single commercial transaction between 0 euros and 1,500 euros, 100 euros - for each commercial transaction with a value between 1,501 and 15,000 euros and 150 euros - for each commercial transaction exceeding 15,000 euros.

According to the statement of reasons from the report approved by the IMCO Committee, the normative act was initiated with the aim of protecting SMEs and micro-enterprises regarding late payments for invoices issued by them.

In the statement of reasons, the IMCO Committee states: "Regulation on late payments is essential to protect the economic dynamism of SMEs and, by extension, the European single market. This reform is essential to creating a European landscape where SMEs can thrive unaffected by financial unpredictability and embodies the vision of a thriving, innovative and competitive European economy. (...) This change is vital to maintain the integrity of financial transactions and the operational viability of SMEs, which is why standardized payment conditions, such as the 30-day term supported by the European Commission, are seriously considered to establish consistency of practices of payment. (...) The objective is to prevent late payment practices and maintain compliance with contractual obligations, ensuring that SMEs can compete fairly and maintain financial stability. To this end, the legislation requires ongoing impact assessments and enforcement measures to monitor and address late payment issues in businesses of all sizes."

Moreover, the MEPs also propose a 12-month delay on the implementation of the future regulation to give all relevant parties the necessary period to establish and adjust the essential systems for joining the regulation.

"Recognizing the acute cash flow challenges faced by micro-enterprises, it is prudent to extend the grace period for these entities by an additional twelve months when they are in the debtor's position," the statement of reasons states.

Also, through the upcoming Regulation on late payments, clauses in contracts or related practices that distort payment terms or terms, interest rates for late payments or compensation for recovery costs are considered null and void if they are not aligned with the standards of the new regulatory act.