Today, the European Parliament’s committee on the internal market and consumer protection voted on a report to combat late payment in commercial transactions. The updated regulation aims at encouraging a culture of prompt payments and will be crucial for thousands of small and medium-sized enterprises (SMEs) across Europe, as they are the most affected by invoices not being paid on time. According to the European Commission, one in four bankruptcies are due to late payment.
Throughout the negotiations, the Socialists and Democrats in the European Parliament have shown they side with SMEs – by successfully setting fixed deadlines for payments. Our Group has also managed to preserve the right for SMEs to obtain interest for late payment.
Tsvetelina Penkova, S&D MEP and shadow rapporteur on ‘Combatting late payment in commercial transactions’, said:
“Late payments always increase in times of crisis and economic turmoil. SMEs are the prime victims of this situation, since late payments directly affect their incomes, investments, cash flow and competitiveness; resulting in an imbalance of power with bigger companies. This is why the S&Ds are pushing for a regulation that empowers small businesses and protects both their rights and competitiveness on the market!
“Today’s vote is a success for the socialist family, who have always been by the side of SMEs. We have successfully ensured that invoices are settled within a fixed timeframe, which will significantly impact SMEs’ growth and alleviate stress levels for entrepreneurs.
“We regret that, during negotiations, the EPP Group – which supposedly stands as a defender of SMEs – showed inconsistency by advocating for excessive flexibility by allowing contractual freedom to fix payment periods. This was unacceptable to the Socialists and Democrats! Today, SMEs are suffering from an imbalanced bargaining position to negotiate contracts with bigger companies. This proposal, backed by ECR and ID, would only intensify uncertainty among SMEs and definitely shows the right wing’s natural affinity for the rich and most powerful.”
