The Chamber is sceptical about the late payment regulation proposal

The Chamber does not support the European Commission's proposal for a regulation, which stipulates a maximum 30-day invoice payment deadline, establishes the obligation to demand late payment and debt collection costs of 50 euros for each delay, and obliges member states to supervise the timely payment of invoices. The European Commission should not intervene in such detail in the relations between companies, and the proposal is over-regulation.  

A 30-day invoice payment term can unnecessarily limit the freedom of agreement
The European Commission has come up with the idea of establishing a single maximum invoice payment term for all transactions between companies, which is 30 calendar days from the date the invoice reaches the debtor, provided that the debtor has received the goods or services. Within this term, the contracting parties would retain their freedom of contract, and shorter payment terms may also be provided for in national legislation.  

The Chamber announced in a letter sent to the Ministry of Justice that it opposes this change. We believe that the planned change is intended to interfere too much in the relations between companies. The principle according to which the maximum payment term must be 60 days should continue to apply, and the contracting parties must have the possibility to agree on a longer time, if such extension is not unfair to the creditor. Neither the European Union nor the Estonian state should unnecessarily limit the freedom of agreement of companies.  

Even if a maximum 30-day invoice payment deadline is established, it would be extremely difficult in practice to check whether companies adhere to it or not. Since there are many transactions, it is not realistic that the national supervisory authority can effectively control the fulfilment of the requirement, unless one party to the contract reports the breach by itself.  

An automatic late payment penalty obligation is not necessary
The commission's proposal also states that if the debtor pays the invoice later than the due date, then he/she is also obliged to pay the penalty for late payment, unless the delay in payment is not due to the debtor's fault. The penalties for late payment become automatic and mandatory until the debt is paid.

The Chamber sees the planned change negatively, as it significantly restricts the principle of freedom of contract. When the amendment enters into force, the creditor would not have the right to refuse to demand the penalties for late payment from the contractual partner, and the debtor would not have the right to refuse payment of penalties for late payment even if the creditor does not demand it. It would be over-regulation.

The mandatory compensation of 50 euros is not reasonable
The proposal of the regulation stipulates that if the penalty for late payment is due, the debtor must automatically pay the creditor a compensation of 50 euros for each transaction. The creditor does not have the right to waive compensation.

The Chamber does not support this idea, because it would involve the European Union too intensively in the relations between companies and would lead to over-regulation. The creditor should retain the flexibility to decide if, when and to what extent it demands collection costs from the debtor. For example, a 50-euro compensation may turn out to be unreasonably high in a situation where the debtor is one day late in paying a 20-euro bill. At the same time, the 50-euro compensation is of no use in a situation where the debt reaches millions of euros.  

The Chamber does not see the need to create enforcement agencies
The Commission wants Member States to create enforcement agencies responsible for ensuring compliance with the aforementioned regulation. According to the proposal, enforcement agencies may take measures to ensure compliance with payment deadlines. In addition, the Commission is of the opinion that enforcement agencies could have the power to initiate and conduct investigations on their own initiative or based on a complaint. According to the proposal, they would have the right to carry out unannounced on-site inspections as part of investigations, impose fines for infringement, initiate proceedings and require the debtor to stop the infringement. 

The Chamber does not support the creation of enforcement agencies because generally the conclusion of contracts is voluntary, and in the case of unacceptable contract conditions, the parties do not have to conclude a contract. If a dispute arises regarding the signed contracts, in our opinion, the parties have the opportunity to go to court to protect their rights, if legal peace cannot be ensured through negotiations. The creation of enforcement agencies would in turn increase the costs and administrative burden of the state, incurring these costs and increasing the burden is not essential.  

An overview of the prevention of late payments in business transactions can be found here.