The new regulations are seen as vitally important to the EU’s return to economic growth. On a daily basis, dozens of small- and medium-sized businesses (SMEs) go bankrupt due to their invoices not being paid, resulting in unexploited businesses opportunities and job losses. Processing payments on behalf of SMEs across the UK, SmartDebit continue to keep up-to-date with the latest developments in the battle against late payment culture.
According to the Directive, commercial businesses will now be expected to settle supplier invoices within 30 days, unless both agree to a longer time limit (60 days maximum). Any buyer must confirm the goods or services conform to the contract within 30 days, businesses are automatically entitled to claim interest for late payments and can also obtain a minimum fixed amount of EUR40 as compensation for recovery costs sustained by late payments from ‘the cheque is in the post’ and other such ruses.
Another rule is the statuary interest rate increasing to at least eight percent above the European Central Bank’s reference rate. The interest charges will begin automatically 30 days from the latest date of settling the suppliers invoice.
Although public authorities must pay for the goods and services they procure within 30 calendar days, or in very exceptional circumstances, within 60 days, the new measures are optional for enterprises. They acquire the right to take action if desired but are not obliged to do so.
A SmartDebit spokesperson commented on the directive, “This seemingly common sense initiative will provide encouragement for small businesses across the continent, however, it remains to be seen what the working practices are and how it is interpreted within local law. Being that the new measures are optional for enterprises, smaller suppliers still may not challenge their larger buyers through fear of losing their business altogether.”
“Collaboration within the supply chain will take on the urgency leading to increased value placed on electronic payments, which have a proven track record of assisting companies in achieving excellent payment performance.”
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