Late payment has long been recognised as a problem within the European Union. To combat the problem further, a new Late Payments Directive has been proposed. Some of the key provisions are as follows:
- Payment within 30 days of receiving the supplier's invoice, receipt or, in certain circumstances, verification of the goods or services, whichever is latest.
- Extensions to 60 days may be agreed between the parties.
- Interest at 8% above base rate on late payments.
- Automatic entitlement to 40 Euros compensation for late payment.
- In contracts which contain ‘verification periods’ to allow purchasers to check that goods conform to the contract, interest will not start to run until this period has expired.
- Verification periods will be limited to 30 days to prevent abuse.
- Parties will still be able to agree to payment by installments.
The Directive has been adopted by the European Parliament. It is expected that it will now be adopted by the EU and come into force by the end of the year. The Directive must then be implemented by the UK by early 2013.