Brussels, 10/06/2004 (Agence Europe) - Businesses in the southern European Union are as bad payers as ever, despite the entry into force in August 2002 of the "Time Limit for Payment" directive, which calls for interest to be paid in cases of non-payment 30 days after receipt of the invoice.
Businesses are taking up to 93 days to pay their suppliers in Italy, 86 days in Portugal and 81 days in Spain, according to a study carried out by a debt collecting agency based in Stockholm, Intrum Justicia. Portugal, the Czech Republic and Lithuania take the longest to pay beyond the deadlines authorised by the contract (38, 23 and 20 days respectively).
The Nordic countries, on the other hand, got the best results: on a total of 26 days' limit, 6 days late in Finland (where interest kicks in after two reminders), on 20 days, 9 days' delay in Estonia, on 35 days, there were delays of 7 or 8 days in Sweden and Denmark.
"Despite political efforts, the delays have still not been reduced", said the study's author, Stefan Schär, adding that the average delay in the EU was 16 days in 2003, as against 14 days in 1997. Delays have been reduced by one or two days in Belgium, Italy, the Netherlands and Finland. However, they have increased by almost a week in Austria, Spain and France.
These delays represent losses in the order of 3% in Spain, Belgium, Latvia and Poland. Small and medium enterprises are particularly vulnerable to the accounting problems caused by bad payers, noted Stefan Schär. According to the Intrum Justicia survey, which spoke to 9,000 businesses in 22 European countries, delays in payment are considered to be a "serious threat" by 65% of businesses in Portugal, 64% in Lithuania and 60% in Estonia.
Delays in payment are often due to the financial problems of the debtor, or administrative problems. However, they are very often used intentionally by businesses to obtain a cheap accounting advantage: this is the story behind 72% in delays, according to the businesses interviewed in Germany, Austria and the Czech Republic, and 60% in the southern countries. The construction and distribution sectors are the worst payers, according to analyses by the European Commission when the directive was being prepared. The Commission also stressed that national governments are among the worst payers, with 74 days of delay in the EU. The Commission itself was guilty of an average delay of 43.7 days in 2002,and paid 79% of its invoices within 60 days in 2003.
"The rules set by the directive are fair, but they are not being correctly applied", said the chairman of Intrum Justicia, Jan Roxendal. He hopes to see an improvement . He hopes to see an improvement after the evaluation of the results of the directive, to be presented by the "Enterprise" DG of the Commission in August. He feels that recovery procedures should be improved, and the debtor made liable for legal costs. He would like to see the monopoly of lawyers in defending late payment cases abolished, which exists in Germany, Denmark, the United Kingdom and Belgium.
According to the study, the legal procedure lasts an average of 2 years in Sweden and 4 years elsewhere. Depending on how long proceedings take, businesses take 9 years to get their money in the Czech Republic, and over 4 years in Sweden and Denmark. Businesses asked are unhappy with levels of efficiency in legal recovery proceeding in over 80% of cases in the Czech Republic and Portugal, in over 70% of cases in Spain and Italy. However, in over 70% of cases in Finland, Sweden and the United Kingdom, they are satisfied.