The Parliament's Internal Market Committee agreed government bodies should have just 30 days to pay invoices.
For business-to-business transactions, companies will be expected to pay within 30 days but can agree on a payment period of up to 60 days in certain cases.
This is a major departure from the original proposal by the EU executive, which had initially focused exclusively on payments by public institutions, leaving the private sector free to negotiate their own contractual terms.
Under the revised version drafted by German Socialist MEP Barbara Weiler, those failing to pay in time will pay penal interest rates "at least 9%" higher than the statutory rate. This would typically mean paying double-digit interest as well as fixed fee of €40 compensation for recovery costs.
A number of MEPs wanted the health sector omitted from the recast of the Late Payments Directive – a revamped piece of legislation designed to ease cash flow problems for small and medium-sized enterprises (SMEs).
However, a late compromise means public hospitals will have twice as long to pay private contractors as other government bodies do.
Small health firms in the private sector, many of which rely on public hospitals as their major clients, have lobbied for changes to the Late Payments Directive, claiming they can wait for up to two years for payment (EurActiv 10/07/09).
Last-minute compromises effectively mean public and private hospitals will be able to keep contractors waiting for two months for payment. There was concern that if public and private hospitals were working under different payment rules it would distort competition in the health sector.
While health authorities in several member states are already paying quicker than 60 days after receiving invoices, southern European countries will struggle to tighten payment periods.
The worst offenders in late payments in the health sector have been Greece, Spain, Italy and Portugal – none of which have the cash to pay contractors more quickly than is current practice.
There were also some on the Internal Market Committee pushing for exemptions for the childcare and elderly care sectors, but the majority decided this was not justified.
The directive will also apply to the EU institutions, which have come under fire in the past from the European Ombudsman for delays in settling bills (EurActiv 28/04/09).
It now falls to the European Council to debate the revised directive put forward by the Internal Market Committee. Member states are hesitant to back strict rules that might jeopardise companies' freedom to contract.
MEPs believe the compromises agreed yesterday (28 April), which give considerable leeway to the private sector to negotiate terms that suit both parties, could be enough to win support from some governments.





