To help small businesses, public authorities and big firms must pay bills faster

14 December 2009

To help small businesses, public authorities and big firms must pay bills faster

Late payments cost the economy billions yearly, sums which absolutely cannot be afforded in these times of economic crisis. The European Commission’s proposal to ensure that public authorities pay up more quickly can therefore count on support from the SP. The SP believes, however, that it should go further, and add a proviso that firms should also pay each other within thirty days of being billed. European Parliamentary group leader for the SP Dennis de Jong explains: “A term of thirty days backed up by a ‘fine’ when payment is not received on time would be a good rule. I find it incredible, however, that the Commission, referring to ‘freedom of contract’, is not willing to extend this rule to contracts between firms.”

Dennis de Jong According to De Jong a broader directive is needed which also applies to orders involving two or more firms. “From my talks with people from SMEs – small and medium-sized enterprises – it seems that many such firms, in contrast with what is often asserted – would appreciate such a directive. It would give small firms a chance to combat the dominance of big corporations.” In the Netherlands, for instance, major supermarket chains operate a standard term of ninety days. In the metal-working sector, small suppliers even have to put up with a term of 120 days. For many enterprises which simply have to swallow this, it can mean the difference between survival and bankruptcy.

Exceptions to payment periods should, in the SP’s view, be allowed only in exceptional instances, such as in the case of companies whose business is highly seasonal. Toy shops’ sales are concentrated in December, for example, but they’re buying in right through the year. The aspect of the Commission’s proposal which would allow exceptions for the public authorities covered is to be opposed, however. “Allowing too many exceptions to the directive is a bad idea,” says De Jong. “I have heard no good reason why public authorities should be offered exceptions. In the Netherlands we don’t allow it, and that should be the case in the rest of Europe."

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