Eurochambres position on the Late Payment regulation

Eurochambres supports the intention to promote a fairer business environment but expresses concerns over the Commission's proposal for a regulation on Late Payment. The new proposal will not necessarily support companies and risks adding limitations to doing business in the single market. Eurochambres believes that the proposal de facto eliminates the freedom of contract between businesses and risks creating excessive pressure on SMEs and reducing the overall competitiveness of the single market.

In September 2023, the Commission published the SME Relief Package, including a proposal for a Late Payment regulation, a proposal for a directive on tax simplification for SMEs, and a set of measures to improve SMEs’ performance.

The revision of the legal framework of the Late Payment Directive was considered necessary to address the shortcomings resulting from the current EU legislation, focusing on preventive measures, the enforcement of late payment mechanisms, the maximum payment term, and access to redress mechanisms.

The Commission Impact Assessment published in September 2023 reports that in 2021 roughly half of all EU businesses declared accepting longer payment terms. Eurochambres therefore believes that late payments, in principle, affect and involve businesses of all sizes as well as public authorities.

Differently from SMEs, public authorities and large companies are able to differentiate their portfolio of customers and suppliers. Small companies, instead, rely on a limited number of customers, financial volumes, and reserves. The limited stream of cash often forces entrepreneurs to request external financing. Despite this pressing need for liquidity, SMEs experience limited access to bank loans. In this sense, longer payment terms represent in some cases a source of financing and help them to cope with liquidity shortages.

Moreover, SMEs operate mostly at the regional and local levels and according to contractual relationships developed over time, tailored to their needs, and based on smaller ecosystems.

Eurochambres supports the Commission's intention to improve the capacity to conduct business in a fairer and more conducive environment but expresses concerns over the Commission's over-stringent proposal and invites the European co-legislators to respect the principle of proportionality in the implementation of new measures on late payments.

The freedom of contract represents an essential pillar of commercial transactions. We are convinced that restricting private autonomy in such a substantial and far-reaching manner would certainly not bring about relief or improvements.