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Combating Late Payments in Commercial Transactions

The UK and Scottish Governments have recently published a joint consultation seeking views on the implementation into domestic laws of the European Directive 2011/7/EU on combating late payment in commercial transactions.  The Directive is based on existing UK legislation as the UK is seen to be exemplary in the approach to combating late payments in commercial transactions. 

Many companies, regardless of their size, have to overcome the obstacle of late payments resulting in additional financial and administrative burdens.  The main aim of the Directive is to introduce common minimum requirements, with which all Member States should comply, in an attempt to create an environment where payment is the norm and late payments are unacceptable.  By way of example, the Directive fixes the period for payment both between businesses and between businesses and public authorities, and establishes a minimum compensation payment of €40 wherever interest becomes payable for a late payment. 

If the Directive is brought into force, this shall become an automatic right without the need for the creditor to issue a reminder.  In addition to this minimum compensation payment, creditors shall also be entitled to reasonable compensation for additional costs incurred due to late payment, including instructing a solicitor or a debt recovery agency.

If you would like further information as to whether your business may be affected by the Regulations, please contact Morag Christoffersen or Kirstin McPherson.

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