Late Payments Regulation: we need to improve the payment culture to unleash the full potential of SMEs

Stable payment processes are vital for the EU's economic health, particularly for small and medium-sized enterprises (SMEs). However, the evidence shows that more than 80% of businesses are impacted by payment delays, hindering their growth, innovation, and employment capabilities. At today´s meeting of the Internal Market and Consumer Protection Committee (IMCO), Renew Europe MEP Róża THUN presented her report on the Late Payments Regulation, which aims to tackle the shortcomings of the 2011 directive, bringing a unique opportunity to improve the payment culture and to build a better framework for a functional and transparent business environment.

Renew Europe welcomes the long awaited European Commission proposal to shorten the payment period, allowing companies to increase liquidity to fuel innovation or provide cost reduction for consumers. All this with the aim to instil a culture of prompt payments, thus ensuring financial stability for companies, especially for SMEs, which are the most affected by this problem.

In addition, our political group advocates for strengthening the enforcement and transparency rules. Member States should guarantee greater independence of enforcement authorities and be effective vis-a-vis late payers. They should concentrate their efforts on the compliance of large companies without putting unnecessary burdens on SMEs. Public institutions are one of the worst payers, which is unacceptable, as public sector should lead by example. Finally, we need to protect the weakest players on the market. That is why the rapporteur has proposed more flexibility for micro-companies, by allowing them to adapt to 30 days payment period one year later after the entry into force of the legislation, until the liquidity flows in the market stabilise.

MEP Róża THUN (Polska 2050, Poland), European Parliament’s rapporteur on the Late Payments Regulation, stated:

“The challenges posed by late payments to SMEs, and particularly to micro-companies, are multifaceted and significantly harm their ability to operate at full capacity. Erratic cash flows can render them financially vulnerable and restrict their ability to grow, affecting their competitiveness, resilience, and ability to innovate.

The Commission has proposed a 30-day payment term for all commercial transactions, a key measure that Renew Europe will assess to make sure it benefits not only the small companies, but also the European economy as a whole. We will take all necessary actions to instil a culture of prompt payments, thus ensuring financial stability for SMEs, which translates into more opportunities for everyone on an economic and social dimension.”