The Eucomed chief said invoices are typically paid between 200 and 300 days after the 30-day limit recommended by the revamped Late Payments Directive, which was published in April (EurActiv 09/04/09). The directive, which is designed to target publicly-funded agencies, is a key component of the Small Business Act, but Wilkinson says governments are ignoring the letter and spirit of the law (EurActiv 01/10/08).
"In our industry, the majority of our customers are public sector and these are explicitly covered by the directive, but there is zero evidence that things are getting better," he said, adding that he feels the EU executive has made a strong case for tackling late payments but some member states have been less enthusiastic.
In the health sector, public bodies have a virtual monopoly over buying medical technologies, forcing companies to continue providing products even when past invoices have not been paid, he said.
"Most clients are either government agencies or are funded with public money. We're now in a position where public bodies which have outstanding invoices are coming back after a year or two and saying they will pay but only if the invoice is discounted. It's morally reprehensible. They are forcing a non-negotiable discount," Wilkinson said.
The problem predates the current economic crisis, but has been exacerbated by the fact that financial markets no longer trust public debt like they used to.
"Until recently, government debt in Europe was AAA-rated, but that is no longer the case for several countries. Banks are reluctant to lend against public debt and, when they do, a higher premium is demanded," he said.
Wilkinson has seen scores of young companies go bankrupt as a result of late payments. He said 80% of firms in the medical technology sector are innovative SMEs, and these are at most risk of going out of business.
"The obvious result of this problem is that small businesses are forced to close because they have no cash. I know of cases where CEOs have committed suicide because public bodies have them over a barrel and they can see no way out."
He said governments seeking ways of helping small companies to stay in business during the crisis should begin by paying their bills on time.
"Our goal is to have the spirit of the Late Payments Directive translated into reality across the European Union," said the Eucomed chief.
To read the full version of this interview, please click here.
