The EU late payment directive came into force on 16th March 2013 – this legislation appears to have teeth so you should use it to bite back.
But make sure you pay your creditors in good time too!
EU late payment directive
Three of the key points are:
- Enterprises will have to pay their invoices within 60 days, unless they expressly agree otherwise and if it is not grossly unfair.
- Enterprises will automatically be entitled to claim interest for late payment and will also be able to obtain a minimum fixed amount of €40 as compensation for recovery costs. They can claim compensation for all remaining reasonable recovery costs.
- The statutory interest rate for late payment will be increased to at least 8 percentage points above the European Central Bank’s reference. Public authorities are not allowed to fix an interest rate for late payment below this threshold.
Make these rules part of your credit management
Some of your customers may hold a balance of power in their dealings with you that allows them to negotiate longer than 60 days to pay. So be it.
Apart from these customers, everyone else should be paying within 60 days and if they fail then you can use this legislation to recover your money.
So warn your customers in advance but use the rules to your advantage and get paid quicker.
Don’t get bitten!
But don’t forget that the rules also apply to you and your creditors, so make sure you pay them on time!
How QuickBooks can help you benefit
Using QuickBooks you can incorporate references to the EU late payment directive into the documents you send to clients. For example, a reference can be included in the invoice template and also in the standard emails that accompany invoices and statements when these are emailed to clients.
On the creditor side, a regular review of the aged creditors report will reveal whether any suppliers’ bills are getting close to 60 days old.[Image courtesy of naypong/ FreeDigitalPhotos.net]