Companies hit out over delays in paying bills

Date: 21/11/1996

By Simon Coss

ACCUSATIONS of hypocrisy have been levelled at the European Commission for allegedly failing to stick to its own guidelines on the prompt payment of bills.

Eighteen months after the Commission called on public institutions and large companies to settle their debts within 60 days, some firms who have had dealings with the institution are still reporting long waits for payment for their work.

This has prompted sharp criticism of the Commission for failing to do enough to put things right.

“This is a serious problem which causes particular difficulties for small and medium-sized enterprises and non-governmental organisations (NGOs). It sends a message of sloppiness, bureaucracy and inefficiency,” said Dutch Liberal MEP Laurens Brinkhorst, the European Parliament's budget rapporteur.

A large proportion of the complaints landing on the desk of the EU Ombudsman Jacob Söderman since he took office just over a year ago have also been related to such delays.

“Everyone should make the effort to pay their bills on time. The problem here lies in the Commission's bureaucratic procedures. They must change things,” he told European Voice this week.

Commission officials say they are aware of the problem, but insist that significant improvements have been made over the past year.

“We have a system in place to measure payment times. The average is now 44 days and we aim to pay up within 60,” said one.

But Budget Commissioner Erkki Liikanen recognises that there are still problems. “We have some sectors where there is too much delay,” he admitted.

Liikanen says some of those problems are caused by factors outside the Commission's control, but concedes that there are cases “where the process within the Commission has been too slow”.

On the face of it, the institution's claims that things have improved may appear justified. But critics claim there is a catch.

“Often what happens is that the Commission will promise a company a contract and ask it to do the work requested in the meantime. There will then follow what can often be a very protracted bout of internal wrangling, while the relevant department obtains permission to formally award the contract,” said one source.

Some companies claim they have had to wait for up to two years after completing the work before having their bill accepted.

Officials in the Directorate-General responsible for the budget (DGXIX) say that units offering work in this way are breaking the rules and that firms should not work for the institution 'on spec'.

However, critics maintain that in reality, if a company makes the effort to play by the book when bidding for work, someone else will be given the contract.

The problem of late payment appears to be evenly spread across the Commission, with complaints being levelled at most directorates-general.

Inflexibility and inefficiency, rather than a deliberate attempt to postpone payment, appear to be at the root of many of the delays.

“At the end of the day, nobody ever queried our bills. It all boiled down to bureaucratic delays. If someone mislays a piece of paper, the whole payments system can grind to a halt,” said one former contract-holder.

Liikanen points to the institution's complex internal procedures which require many stages to be gone through before bills are paid - causing confusion over where responsibility lies - as a key reason for some of the delays. He said everything possible was being done to decentralise the system, but added that he hoped more 'profound' reforms could be achieved.

Meanwhile, the Commissioner advised anyone who did not receive payment within the 60-day deadline to “contact the service responsible and ask for a reply”.

He added: “They must give one. Sixty days is the rule we must respect and we now have continuous follow-up for all cases that go over 60 days.”