MACM discuss EU Late Payment Directive in Paris

The congress, which was very well attended by pan-European participants, addressed late payment in Europe and the EU Directive 2011/07/EU which was published earlier on this year by the EU Commission to combat late payment in commercial transactions in Europe. This Directive should be transposed to all EU countries' legislation, including Malta, by not later than March 2013.

In his presentation, Josef Busuttil welcomed the initiative of the EU to ensure sound cash flow in the European market. By this Directive, the EU governments will not be allowed to pay their suppliers later than 30 days from the date of invoice. In this regard, this Directive should help the liquidity of the business community as the public procurement in the EU is significant, representing more than €1,943 billion per year.

This Directive also discourages late payment in business-to-business transactions. With specific exceptions, firms will not be allowed to pay later than 30 days and in case of late payment, suppliers will be allowed to charge interest on late payment amounting to 8% ECB intervention rate and also claim a minimum of €40 as compensation for the recovery cost.

However, Josef Busuttil argued that the new Directive may not be effective for three main reasons: it may be confusing and intrusive for the business community; it may lack the support of other legislation and judicial systems; and it can only cure the symptoms and not the actual causes of late payment.

In view of the identified shortfalls of this new Directive, Mr Busuttil critically analysed what is causing liquidity problems and hence late payment in business-to-business transactions. Following the analysis, a number of intuitive suggestions, which the EU and the local governments may consider were presented and explained in detail by Mr Busuttil.

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