Late Payments Directive, all bark and no bite?

Late Payments Directive, all bark and no bite?

April 23, 2014  |  Europe, Legal, Payment

In 2013 the European Late Payment Directive came into effect. It allows EU companies to maximise their payments period to 30 days. Only with mutual consent can contracting parties increase the payment period to a maximum of 60 days.

Sounds nice. But in the B2B and B2SME sectors the Late Payments Directive seems to be all bark and no bite. What is going then? Well, major buyers have so much market/buying power that suppliers (especially the small ones) are forced to accept payments made far beyond 60 days. And the weak economic situation doesn’t make things easier either.

In fact we sometimes get paid 90 days after the first day of the next month. Yep, that could lead to 150 days of all sweat and no wage.

Well you couldn’t care sh.t less about this if you are a procurement officer at major buyer. Right? Well, actually not completely. Because this is what happens. You pay after say 100 days. Because of that your contingent of  smaller suppliers als start delaying payment to their suppliers. And somewhere down the line suppliers go bankrupt. Because of these late payments, regardless of the Late Payments Directive. And somehow, somewhere the one that gets sacked is the spouse of your favourite colleague….. Think of that. Or the supplier that goes bankrupt is one of your preferred suppliers, weakening your own quality of service. Ouch.

So even though the Late Payments Directive is mostly all bark and no bite in the B2B segment, the modus operandi of big buyers makes them biting their own tail. It is high time to start with financial supply chain and dynamic discounting!


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