The directive is due to be implemented next year. Businesses from all the participating member states will then be under the same obligation to ensure that invoices are paid on time.
The main points in the EU Directive are:
- Public authorities will be required to pay suppliers within 30 calendar days of receipt of an undisputed invoice. (This matches the UK Government’s standard practice for the public sector).
- For business to business payments, the period for payment fixed in the contract should not exceed 60 days, unless otherwise expressly agreed and provided such terms are not grossly unfair.
- It copies current UK practice of a default payment period of 30 days, where terms have not been agreed.
- There is a minimum €40 (approximately £31) for compensation. (Current UK leg
islation sets three levels of compensation payment according to the value of the payment). Suppliers will not be prevented from seeking to claim additional recovery costs.
Business and Enterprise Minister Michael Fallon said: “Tackling late payment will free up millions of pounds in the supply chain, helping to boost the economy and safeguard the future of thousands of UK companies.”
The public consultation on implementing the directive is set to run until 19th October 2012.
Please contact us if you would like more information about the issues raised in this article or any matter relating to credit control and debt collection.