In 2023 the share of enterprises having problems because of late payments in the EU experienced its highest increase in the past five years. Average payment periods seem to have deteriorated, albeit more on Business to
Business (B2B) than on Government to Business (G2B) transactions. Regardless, governments continue paying later than businesses and larger companies remain the less likely to pay on time in most Member States.
Special analysis was conducted in this edition of the Annual Report regarding the relation between late payments and cross-border transactions and late payments and access to finance. For the first, it was found that companies where exports account for between 0 and 50% of their turnover tend to face more issues with late payments. In the case of the second, the main finding is that late payments considerably hinder firms’ ability to access financial services and, conversely, difficulties in accessing finance that result in even more late payments.
The Annual Report is the main analytical output of the Observatory. It provides a comprehensive analysis of the main trends and developments in payment performance related to commercial transactions in 2023.
Because of their stable revenue streams, their credibility and the fact that delayed transactions go against governmental interests, public administrations should be expected to be reliable payers. As they are the ones establishing legal payment terms, they are supposed to be the first to respect them, particularly as they are held to higher accountability standards than businesses. In addition, to foster a culture of prompt payments, public administrations should act as a model for the behaviour they expect from the private sector.
Yet late payments from public authorities persist. Given the importance of the public sector for the entire economy, these delayed transactions have an impact on cashflows and can have severe consequences on the liquidity of companies, particularly for SMEs and for those sectors more reliant on public procurement, such as construction and healthcare.
This report aims to provide a deep understanding of the issue of G2B late payments by examining underlying causes, available data and the effectiveness of Member State strategies. By assessing existing information, it also aims to pinpoint the data shortcomings that create obstacles to a more comprehensive analysis.
Paper-based invoices are losing ground to electronic invoices. The switch to eInvoices (i.e. statements issued, sent and received in a digital format that allows for automatic and electronic processing) is bringing about significant changes for the seller and buyer alike.
While the changes in how invoices are issued, transmitted and received as a result of the shift from paper to digital have been well studied, less attention has been paid to the effect on when a seller gets paid. This report is specifically concerned with that effect. Put simply, it aims to answer the question of whether the adoption of eInvoicing reduces late payments.
Most efforts to combat late payments in commercial transactions are focused on prevention. Nonetheless, enforcement measures are an important tool to combat late payments. By imposing financial or reputational penalties for non-compliance with agreed-upon payment terms, they help deter bad payment behaviour and promote a culture of financial responsibility and fairness. Additionally, they serve to compensate creditors for the damage caused by the late payment.
This thematic report compares the ways in which Member States have implemented and enforced the Late Payment Directive. In addition, it showcases enforcement regimes in Member States that go beyond what is prescribed in the Late Payment Directive and can potentially serve as best practices.
This annual report stands as the foremost analytical output of the Observatory. It provides a comprehensive analysis of the trends in payment behaviour in commercial transactions in the EU, an analysis of the collected data and an assessment of the various initiatives and documents put forward across the EU to combat late payments.
This report is divided into two main parts. The first one analyses the data collected on payment performance across the EU and is divided into three sections: A methodological note, a European-level analysis and a country-level analysis. The second part provides an assessment of the initiatives and policy measures existing in the EU and UK to combat late payments. Finally, there is a section providing the conclusions of the entire report.
Factsheets
This report covers preventive measures for late payments implemented in EU/EEA countries, as well as the UK showing a mix of preventive measures implemented by the selected countries. Countries such as France, Italy or Spain have launched several significant initiatives addressing the issue, but there are also countries where only a limited number of initiatives have been identified. Most of the initiatives taken at the country level focus on ensuring transparency. Other types of measures, such as financial mechanisms (incentives), the restriction of access to public funding or invoice management are rarer. This suggests that there is scope for sharing best practices and mutual learning. Moreover, it would be challenging to attribute a change in payment behaviour to only one type of measure. Rather, a combination of various measures is likely to be most effective in improving payment practices, encouraging prompt payment practices and reducing late payments in the longer term.