Europe closes the backdoors for late payers

Timely payment of invoices by the government and between companies must be improved. The European Parliament wants to close a number of legal backdoors for the current practice of extensions after 60 days. MEP Anneleen Van Bossuyt reacts positively to the European intention. “Europe is standing up for smaller businesses. And that’s a good thing too. Late payments are often a noose around the neck of small businesses.”

Survival

Two thirds of the companies in this country grant longer payment deadlines than they find comfortable. What’s more, it turns out that just 17% of SMEs are familiar with the European legislation that protects them from late payments. And that’s a problem, says Anneleen Van Bossuyt: “A large company might be able to wait longer for a payment, but for a small company, that hard-earned money is often crucial to survival.”

Disastrous consequences

The deadlines within which companies are paid for services delivered to other companies can increase dramatically. And that’s allowed by current legislation: the legal payment term of 30 days can be extended contractually. “Small companies often do not dare to reject such contract extensions for fear of losing their contract. This often has disastrous consequences, above all for small businesses,” says MEP Anneleen Van Bossuyt.

Maximum 60 days

The call by the European Parliament to close backdoors for late payers is completely in line with a federal bill of the N-VA from 2017. The aim is to pin down the maximum payment term between companies to 60 days. This is of paramount importance: late payments undermine liquidity and also place limits on growth and the recruitment of staff.

Government pays late

But it’s not only companies that have to pay correctly and on time. The government has to do the same. “The one that makes the rules should itself respect the rules. A small company that washes the windows of the town hall doesn’t have enough of a margin to wait weeks for payment. Yet figures show that the government does badly when it comes to paying bills on time. This urgently has to change too,” Anneleen Van Bossuyt concludes.