Late Payments Directive may not help with payments

By 2013 the EU will have its Late Payments Directive in force, which is supposed to help Small and Medium Enterprises collect against owed debt.  The European Union decided to attempt to do something helpful when they found out, back in 2009, that trillions of Euros were owed for periods beyond what might be called reasonable.

The Late Payments Directive will make payment of invoices by public and private organisations mandatory within 30 days.  There is, however, wiggle room.  Private organisations can negotiate for contractual terms longer than 30 days and public organizations would have an absolute deadline of 60 days.

According to almost half of UK credit managers, such a directive will have an affect on collections.  It is reported that more than half of the businesses in the UK have had their supply companies attempt to change their terms of payment within the last year.  Around twenty per cent of business owners claim that suppliers have attempted to change agreements more than once during that same time.

For their part, suppliers claim that many of their large clients have asked for a discount based upon just paying their bill on time.

Many believe that the EU action will help clear this up, but a large percentage of business owners and credit managers believe that the bill is not enforceable.  The bill more or less lets enforcement up to the creditor.  It allows the party owed to add extra penalties and late fees.  That’s all nice and good, say a number of managers, but it’s also a sure way to lose business.

Small and Medium Enterprises will be just as afraid to use hard tactics against big customers then as they are now.