EP Internal Market Committee approved on Wednesday several amendments to a planned EU directive designed to tackle the problem of late payments. They believe that deadlines for paying bills in the business world should be laid down by law for both the private and public sectors,

The cash-flow problems faced by small firms are biting harder than ever in the current crisis and can even tip companies into bankruptcy. This recast version of an existing directive on combating late payments aims to give more protection to businesses and the jobs they create. The fight against moroseness is based on a commitment in the Small Business Act

Thirty days to pay a bill

The Internal Market Committee wants all invoices to be paid within 30 days, whether the transactions are between public sector operators and private companies or between private firms (business-to-business). In both cases, the period could be extended to 60 days. In business-to-business transactions, the extra period would have to be stipulated in the contract and could even be more than 60 days provided the extension does not cause unjustified damage to either party. For public bodies the rules are stricter: special justification is required to delay payment beyond 30 days, while the 60-day deadline cannot be exceeded at all.

However, MEPs envisage some flexibility for public health institutions and public medico-social institutions, which, because if its special nature, would have 60 days as their standard deadline for paying bills to private contractors.

Parliament's political groups struck a compromise on the question of imposing payment deadlines on private companies.  This was not in the Commission's draft directive, which only envisaged imposing payment deadlines on public sector operators. MEPs felt it was unjustified to differentiate between public and private sectors.

Next steps

The Internal Market Committee adopted the report by 30 votes to 0, with 6 abstentions. The plenary vote is scheduled for May or June in Strasbourg.  The date will depend on whether an agreement can be reached at first reading between Council and Parliament.