The European economy is widely affected by late payment, which have a negative effect in particultar for small and medium enterprise. The European Commission is taking further steps against four member states – Greece, Italy, Slovakia and Spain – to ensure the correct application of the late payment directive (directive 2011/7/EU). This action has been announced by the EU in the latest weeks, and is aimed at preventing losses to businesses, particularly small and medium-sized enterprises (SMEs). Delays in payments in business to business and government to business transactions generally have an adverse effect on a firm’s cash-flow. Thus the EU’s directive envisage that when payment deadlines are not met, businesses are entitled to fair compensation. Namely  the EU Commission is requesting an action from member states due to the following: for Greece is related to the new legislation removing creditors’ rights to interest and compensation; for Italy is due to excessively late payment by public authorities; for Slovakia excessively delayed payments in the public health sector; for Spain legislation systematically extending the statutory payment term by 30 days. These 4 member states now have two months to notify the Commission of measures taken to remedy the situation. Alternatively, the European Commission may decide to refer Italy, which receives a reasoned opinion, to the Court of Justice of the EU. “Late payments are a major burden for Europe’s companies, especially small ones. By asking Member States to respect the rules on late payments, we are protecting businesses and helping EU’s competitiveness”, said Elżbieta Bieńkowska, European Commissioner for Single Market, Industry, Entrepreneurship and SMEs

The late payment issue widely affect EU members states economic activities, despite the fact of being old and new member states. Reducing late payments of commercial debt can contribute to restoring access to finance, specially affecting small and medium enterprises. Furthermore, given the employment crisis in many EU Member States, helping entrepreneurship should be seen as a strong tool to support growth and jobs creation. Even for this purpose, actions at a European and national level have been introduced to reduce the cost that firms experience associated with payment delays both in public and private transactions. Despite all the efforts legislation on late payments still varies widely across Europe. Member states have repeatedly pledged to shorten the time firms wait to be paid by state agencies, but results have been mixed. In this context the last advice by the EU Commission is an important signal for members state not to avoid tackiling this bottleneck for boosting employment and growth.