Pay, otherwise pay a fine. This is what the EU Commission suggests. Paying bills late is a widespread phenomenon in many parts of the world, including Europe.
It affects the industry and lead to liquidity problems, bankruptcies with adverse economic effects.
The EU Commission considers that public authorities and public administrations should lead by example and pay their debts on time and thus not contribute to that liquidity problems become worse.
Therefore, public authorities and public administrations should pay their suppliers within 30 days. If they do not pay on time, a penalty payment of 5% of the invoice should be paid. The supplier will also be entitled to interest on overdue payments and compensation for debt recovery costs. The proposal enforces the EU directive that already exists today for debt recovery costs.
The rules are mandatory for public authorities and public administrations who buy goods and services from private companies. Apart from the penalty compensation, the rules also accounts for trade between private companies, but companies will however continue to be free to agree on payment terms and overdue payment interests.
The rules are expected to come into effect in 2010.
Cecilia Helland