Combating late payment in commercial transactions

Following on from our previous alert Don't be late! Time to speak up on the European Directive on late payment terms, the Department for Business, Innovation & Skills has released the results of its consultation on how best to implement the European Commission Directive on late payment in commercial transactions (2011/7/EU).

Key points:

• The Directive will be transposed into English law by amendment to the Late Payment of Commercial Debts (Interest) 1998 as opposed to being introduced in the form of a new piece of legislation;
• The amendments will come into effect from 16 March 2013 (as required by the Directive);
• The amendments will not apply retrospectively, i.e. to any agreements concluded prior to 16 March 2013;
• 77% of respondents were against extending public sector payment terms to 60 days and the government has accepted this - payment terms for the public sector (i.e. involving healthcare or where a public authority carries out economic activities of an industrial or commercial nature) will remain at 30 days, with the government restating that the public sector remains committed to paying invoices promptly;
• Despite a fairly unequivocal response (only 37% in favour), the three tier compensatory charge for recovering debts is to remain - £40, £70 and £100 depending on the size of the debt.

Any business which buys or sells goods or services will be affected by the change in legislation. You should ensure your business is prepared for this.

Visit our previous alerts on the Directive to see how it affects your business and keep an eye out for our next update which will set out the detail of the regulations which will bring effect to the amendments:

• Don't be late! Time to speak up on the European Directive on late payment terms
• New EC Law on payment terms: an analysis of the key changes under the Directive
• Charging interest for late payment: a general overview
• The Late Payment of Commercial Debts Act - what constitutes substantial?