Will Proposed European Late Payment Law Change Anything?

Well done to a whole range of MEPS led by German Socialist Barbara Weiler in sticking up for SMEs across Europe who suffer greatly from cash flow problems caused by the late payment of their trade invoices. On October 5th, a cross party Internal Market Committee backed plans to introduce law shortly that calls for a 30 day limit on commercial trade payments covering both the private and public sectors.
If this proposal is ratified by the full European Parliament later this month, and should companies not pay up on time in the future, suppliers can seek redress by claiming interest on overdue amounts at base rate plus 8%, and 40 euros for recovery costs.
Where have I heard this before? Oh Yes, I remember,……..in the UK, we have the Late Payment of Commercial Debts Interest Act 1998. Under this Act, if companies don’t pay up on time, suppliers can seek redress by claiming interest and extra money for recovery costs…
Sorry, I seem to be repeating myself!
Whilst I applaud European parliamentarians for flagging this issue up as a very serious problem affecting hundreds of thousands of businesses across the EC, I’m still not sure why this law will work fantastically well when our own similar law has failed so miserably over the 12 years of its existence. From what I’ve been told, SMEs in particlar don’t take advantage of this legal backing because 1) they don’t like the admin, and 2) they’re frightened of losing customers if they push too hard for their statutory right to interest on overdues.
These issues won’t disappear with any new law coming out of Brussels. Looking on the bright side however, let’s hope that the sheer introduction of this new legislation will stir up the debate, and maybe….just maybe…..late payment culture will start to change.