Jordi Hereu reminds Europe of Spain's commitment to combating late payments in business

The Minister for Industry and Tourism, Jordi Hereu, at the Competitiveness Council held in Brussels

The Government of Spain is committed to the fight against late payments in commercial transactions, as stated by the Minister for Industry and Tourism, Jordi Hereu, at the Competitiveness Council held in Brussels, where a report on the progress of the work to reach an agreement on the Late Payment Regulation was discussed.

Together with the European Commission, Spain shares the objective of reinforcing a culture of timely payments that provides companies, and especially SMEs, with liquidity and predictable cash flows that allow them to make the necessary investments to improve their competitiveness in the market.

For the Government of Spain, as Jordi Hereu stressed, it is necessary that, in reducing the payment period included in the proposal of the European Parliament and Council, the particularities of each sector and each State be taken into account.

Reducing the time limit to 30 days may have the opposite effect to that intended by this rule, increasing late payments in commercial transactions of products whose nature does not correspond to these times, such as low turnover, seasonal or niche products, agricultural products and non-perishable foodstuffs.

With regard to the mechanisms for control and execution of the measures to reduce late payments, the minister informed of the launch in Spain of the State Observatory for Private Late Payments.

This observatory, whose public consultation closed at the end of January this year, is part of the Crea y Crece Act and aims to monitor inter-company payment periods. Each year, a list of companies that manifestly fail to pay their suppliers on time will be published. The list will include the identity of companies with more than 600,000 euros in arrears and which pay fewer than 10% of their total invoices within the legal deadline.

A problem for SMEs

Late payments have a strong impact on SMEs. One in four bankruptcies is due to late payments of invoices, according to the European Commission.

Late payments create a domino effect that leads to more and more late payments. In Europe, 70% of EU companies confirmed that being paid on time would, in turn, allow them to pay their own suppliers on time.

In general, late payments reduce the competitiveness of firms, as they increase financing costs and cause them to miss out on attractive business or investment opportunities.

Non official translation