Late payment rules to spark clash with member states

Date: 06/01/2000

By Renée Cordes

The European Commission and MEPs are heading for a fresh clash with member states over planned new rules designed to help firms collect overdue payments from corporate clients.

At its last plenary session of 1999, the European Parliament approved a series of amendments to the Commission's proposal, which seek to give companies - especially small and medium-sized enterprises (SMEs) which rely on prompt payment - more leverage in their efforts to get bills paid on time.

The Commission claims that late payments cost the EU more than 450,000 jobs a year and are responsible for more than a quarter of all bankruptcies involving SMEs. It unveiled a proposal nearly two years ago which called for uniform debt-recovery procedures throughout the Union and for firms which failed to pay bills on time to pay interest at 8 percentage points above the European Central Bank's repurchase rate.

EU governments called instead for an interest rate of just 6 percentage points above the ECB's repurchase rate and most remain reluctant to agree Union-wide procedures for companies to recover payments, arguing this should be dealt with at national level.

But UEAPME, the main lobby group for Europe's SMEs, insists that simplified procedures are vital to ensure that companies avoid unnecessary expenses and red tape. "It would be more efficient to have a 6% requirement in an easy procedure than 8% with a complicated procedure," said Gerhard Huemer, the organisation's head of economic and fiscal affairs.

The debate is heating up at a time when the Commission is under fire for failing to pay its own bills on time.

European Ombudsman Jacob Söderman recently launched an inquiry into late payments by the EU executive after complaints increased. In a letter to the Commission, Söderman asked the institution to provide him with information about the steps it had taken to reduce the current delays in making payments to contractors and organisations entitled to grants and subsidies from Union coffers. He also called for an analysis of the problem and possible solutions.

"Many businesses assume that if they take the Commission to court, their chances of getting future contracts is probably somewhat less," said Ian Harden, the lawyer in the Ombudsman's office who deals with complaints about late payments.

Söderman plans to send copies of the letter he wrote to the Commission to a number of organisations and publish the contents on its website to allow members of the public to give their views on the issue.

The European Commission and MEPs are heading for a fresh clash with Member States over planned new rules designed to help firms collect overdue payments from corporate clients.