Late invoice payers to suffer penalties

Late payment continues to be one of the great scourges for the self-employed and small businesses. This was expressed by the president of the National Federation of Associations of Self-Employed Workers (ATA), Lorenzo Amor, in a conference organised by the Spanish Confederation of Small and Medium Enterprises (CEPYME), in which he claimed that the new European legislation against late payment is “realistic” and takes into account the special vulnerability of this group to late payments, increasing the penalties for those who stop paying their invoices to self-employed workers.

The event took place after learning about the proposed regulation of the European Parliament and the Council on the Fight against Late Payments in commercial transactions, which is being processed.

As Rebeca Torró, Secretary of State for Industry, assessed during the conference, it is necessary to change the European regulatory framework to reduce late payments and non-payment in SMEs. “Working on European regulations will allow us to establish common rules of the game, so that companies can improve their competitiveness, something crucial so that SMEs have greater liquidity and cash flow forecasts, and can increase their competitiveness,” she stated.

The president of the National Federation of Self-Employed Workers Associations (ATA), Lorenzo Amor, recalled that “late payment is a scourge that has been threatening the survival of SMEs and the self-employed for too long, and whose evolution does not respond exclusively to an unfavourable economic context, since, despite the improvement in our economy, we cannot make it marginal.”

According to Lorenzo Amor, late payment, both public and private, continues to be one of the main problems of the self-employed group, “affecting four out of ten,” said Amor. Specifically, during 2023, 38.2% of self-employed workers says they have suffered late payments; of these, 22.7%, by private companies; 10.9%, both by public and private entities; and 4.6%, by public administrations.

And, he added, “if we take the data on the average payment periods published by the Ministry of Finance, it can be seen that the average payment data of the regional administrations has been reduced by ten days in ten years. So, he added, “although we have improved in the last 15 years in terms of average payment terms, especially by public administrations, the truth is that all the legislative attempts with two European directives, and their transposition to our legal system, have been incapable of tackling late payment in a substantial way.”

Looking at the data on late payments in the private sector, Lorenzo Amor said that “we can clearly state that no measure undertaken so far has been truly effective.” And he added: “right now there is no sanctioning regime.” For this reason, ATA considered that the new European regulation against late payments is a great step forward and “must maintain the philosophy that we have always defended, which is zero tolerance for late payments.” And he warned that the regulation “must be realistic, if it does not want to produce the opposite effect to that sought, and will have to protect the SME and the self-employed against dominant positions of the client who try to impose abusive clauses and finance themselves from them.”

The conclusions presented by Lorenzo Amor constitute the basis of what the group of self-employed workers transmits to the European Union so that it is taken into account. According to the president of the National Federation of Self-Employed Workers, “non-payment is more serious than delay and must be prioritised and combated through strong sanctions. Therefore, agile and efficient debt claim procedures must be established and automatic surcharges imposed on those who are late in paying invoices, but with reasonable deadlines for SMEs and the self-employed. Thirty days for the self-employed seems unrealistic to us; 60 seems more viable to us.”

The second point he proposed was to “punish the origin of late payment and malpractice in payment to suppliers.” A third proposal was based on the special treatment, with greater flexibility, that SMEs and the self-employed should receive.

Transparency as essential for effective control was the fourth proposal. And this is what Lorenzo Amor argued: “we believe that digitalisation is underway and the electronic invoice, but, given the immediate entry into force of the European regulation against late payment, we do not know how the payment period will be able to be verified, if there is still no obligation to report them, and who will be the body responsible for verifying said deadlines.”

From CEPYME they observed that the pre-existing regulations have not managed to tackle the problem, since the average payment period (PMP) is still 20 days above the legal period. And they considered that the ongoing processing of the proposal for a Regulation of the European Parliament and the Council on the Fight against Late Payments provides the best opportunity to convey the sectoral needs and specific problems, in order to define an action that does manage to reduce the deadlines without harming SMEs and the self-employed, who are usually the most vulnerable.

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