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EU Late Payment Legislation
Protecting primarily SMEs and sole traders during B2B transactionsHistory
When Was This Legislation Introduced?
The EU Directive 2011/7/EU was introduced in February 2011 to primarily protect SMEs and sole traders engaged in commercial B2B transactions from late payments which were stifling the resources and means to trade properly.Parity
EU Late Fee Harmonization
Member states were given until March 2013 to implement the law on a national level to create parity across all member states so that any business operating within any country belonging to the EU would be able to exercise their rights to charge late fees as per the legislation.In cross border cases, where one party is based outside of the EU, EFTA and Switzerland, its effectiveness will depend on the choice of law in the commercial agreement i.e. the principle of place of business must be done in the country where the legislation exists unless otherwise agreed.
Debtor Protection
Directive for Prompt Payment and Late Fees
The initial aim of the directive was to achieve 'a decisive shift to a culture of prompt payment’ and thereby require debtors to pay interest and reasonable costs to the creditor if they do not pay for goods or services on time. It stipulates that late fees can be applied where a commercial invoice is beyond 60 days for private enterprises, and 30 days for public authorities regardless of whether it explicitly notes it on the original invoice.Modifications to the Legislation was initially proposed in 2009 after it was agreed that the original Legislation brought about in the early 2000’s wasn’t providing enough protection to SME’s. However, the legislation is still under much scrutiny as recent statistics have shown that 1 in every 10 EU based Invoices remain unpaid causing one in four bankruptcies in the European Union.
Flat Rate Compensation
Compensation and Interest Regulations for Debt Recovery
The Directive is very similar to the UK Commercial Debt Regulations Act 2013 in that companies can charge a flat rate compensation fee of:- 40 Euros up to €1000
- 70 Euros up to €10,000, and
- 100 Euros €10,001 and over.
EU companies can also charge statutory Interest which is calculated at 8% plus the ECB (European Central Bank) Interest rate which is updated on the 1st January and 1st July each year.
EU Companies can also charge reasonable recovery costs for the time taken to recover the Invoice amount which includes any past and ongoing efforts for pursuit of payment.
Outstanding Debts
Debt Recovery with InvoiceClaims
Invoice Claims helps many European businesses promptly recover outstanding monies owed to them and also claim the correct amount of compensation and Interest which the legislation rightfully affords.Our fees are only applied when we successfully recover your funds and most of our fees can be covered by the statutory fees applied to the Debtor allowing you the Creditor to receive all the original balance so you are not penalised financially for simply chasing what is rightfully yours.
We can help chase any debt across continent from any EU member state. Simply create an account and upload any invoice dating back up to 6 years and our system will automatically calculate what you could be owed.
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Tired of chasing persistently late invoice payers?
We help businesses retrieve late fees arising from overdue and unpaid B2B invoices and implement effective credit control measures to get you paid on time.
We help businesses retrieve late fees arising from overdue and unpaid B2B invoices and implement effective credit control measures to get you paid on time.
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