The late payment under the EU legislation

• Author: Charlotte Ene
• Pages: 291-300

The late payment under the EU legislation

Lecturer Charlotte ENE1

Abstract

According to Article 14 EC, the European Union shall guarantee the free

movement of goods and services. In this regard, it is necessary that the entrepreneurs

should be able to do their business th roughout the internal market and to recover their

receivables in due time. Therefore, that late payment represents an obstacle to the proper

functioning of the internal market. The Directive on comb ating late payment in commercial

transactions, Directive 2000/35/EC is placed in the context of maintaining and developing

an area of freedom, security and justice. This Directive governs all commercial

transactions irrespective of whether they are carried out between private or public

entrepreneurs or between entrepreneu rs and public authorities, having regard to the fact

that the latter handle a considerable volume of payments to business. It should therefore

also regulate all commercial transactions between main contractors and th eir suppliers

and subcontractors. This paper explores the legal framework on late payme nt of trade

credit from the European legislation perspective.

Keywords: late payment, retention of title clauses, overdue debts, commercial

transactions, enforceable title

JEL Classification: K12, K33

1. Introduction

The impact of enlargement and globalization on the internal market creates

a special context for individuals and companies that operate across borders. The

institutions of the European Union have launched a wide-ranging strategy to adapt

and harmonize European law to meet these new challenges.

At present there is a gap between the free circulation of goods and services

on the one hand and the timely receipt of the corresponding payments on the other.

The available statistics2 revealed that, on average, 21% of all undertakings would

export more if their foreign customers were to pay more quickly; and more than

40% of invoices are still unpaid after 60 days. It is often argued that late payment is

due to the debtor’s financial difficulties and that a high level of statutory interest

1 Charlotte Ene, Bucharest University of Economic Studies, Law Department,

enecharlotte@gmail.com

2 European Business Survey 2000 – Grant Thornton mentioned that one out of four insolvencies is

due to late payment. This leads to the loss of 450 000 jobs each year, adding to the high

unemployment level in Europe. In addition, o utstanding debts worth 23.6 billion euros are lost

every year through insolvencies caused by late payment.