Slow,Payers,what,can,the,new,E business, insurance Slow Payers, what can the new European Directive on Late Pay

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Normal 0 MicrosoftInternetExplorer4 st1\:*{behavior:url(#ieooui) } /* Style Definitions */ table.MsoNormalTable{mso-style-name:"Table Normal";mso-tstyle-rowband-size:0;mso-tstyle-colband-size:0;mso-style-noshow:yes;mso-style-parent:"";mso-padding-alt:0in 5.4pt 0in 5.4pt;mso-para-margin:0in;mso-para-margin-bottom:.0001pt;mso-pagination:widow-orphan;font-size:10.0pt;font-family:"Times New Roman";}It now seems highly likely that a new Directive dealing withthe late payment of commercial debts will shortly be approved.  It has already got the green light from TheEuropean Parliament. As a new  Directive,it will  replace the existing Late PaymentsDirective of 2000, and will seek to bring about a "decisive shift to aculture of prompt payment" within the European Union. Its primary purpose is to create more confidence and affordmore protection to hard stung creditors who are out there in the marketplaceproviding products and services and are not being paid on time and many noteven being paid at all due to the increasing prevalence of insolvency,liquidation, examinership receivership and bankruptcy.  The proposed new EU Directive aims to reverse the trend oflate payment by penalising debtors who are late with their payments as itintroduces interest rates and fixed penalties for those who don't comply. Debtorswill be under a strict requirement to make payment within certain time framesand this proposed new law will entitle the supplier or creditor to chargeinterest for late payment without further paperwork or other written notices. Companies or individuals who are late paying their debtswill be liable for a fixed fee and also responsible for the costs of therecovery of the debt. The directive sets a minimum fee of €40 but this can beincreased depending on the size of the debt. But not all State Bodies in Ireland are renowned for payingtheir debts on time and this new Directive acknowledges the role of StateBodies as being in a much stronger position in commercial contracts andaccordingly, in transactions where a public body is the debtor, the paymentperiod cannot exceed 30 days, unless it is expressly agreed in writing, andthen, the period can be extended to a maximum of 60 days. THE LATE PAYMENTS REGULATIONS 2000 This is an EU wide law that came into effect here on 7 Aug 2002 to combat late payments inbusiness transactions.  It seeks topromote a better culture of prompt payment of bills.  The law is dealt with by way of regulations,the European Communities (Late Payments in Commercial Transactions) Regulations,2002. These regulations provided that penalty interest will becomepayable in business transactions if payment is not made within 30 days, unlessan alternative payment period is specified in an agreed contract. The interest rate chargeable for late payment is therelevant ECB main refinancing race on 1st January or 1st July of each year,currently 1.00 percent plus 7%, unless otherwise agreed. BACKGROUND The Prompt Payment of Accounts Act, 1997 was introduced herefollowing a report from the Task Force on Small Business which recommended thatlegislation should be introduced to secure prompt payment by public sectororganisations, the 1997 Act requires public sector organisations to pay theirbills on time or else they become liable to their customers for penaltyinterest.  Accordingly this Actsubstantially improved payment times in the public sector.  Now these new 2002 regulations are designed topromote a better culture of prompt payment between businesses in Ireland. Whilst the statistics are a little out of date, there aresignificant differences between EU member states as regards payment periods andwhen payment is actually made.  They varyon average from as low as 27 days to a high of 94 days and more.  The average is 53 and in Irelandit is just below at 51.  Again thesefigures are averaged and it is considered that they have not changed significantly. HOW THE REGULATIONS WILL OPERATE The regulations will apply to both business transactions inthe public and private sectors.  However,there are some exceptions.  These are: •           The debtsthat are subject to other legislation such as winding up proceeding proceedingsfollowing on from an insolvent situation•           The claimsfor interest is less than €5•           Transactionswith consumers, non-business customers Contracts that were agreed before 8 Aug 2002 PAYMENT PERIOD The regulations provided that interest shall be payable inrespect of the late payment.  A paymentwill be regarded as being late when 30 days have elapsed, unless an alternativepayment arrangement is specified in an agreed contract between the parties.  The 30 days mandatory payment period beginseither on: a)         the date ofreceipt by the purchaser of an invoice for payment or b)         The date ofreceipt of the goods or services where; 1)         The days ofreceipt of the invoice is uncertain or 2)         Thepurchaser receives the invoice to be for the delivery of goods or services inquestion. In cases where the parties have agreed a procedure foracceptance or verification of the goods, it starts after this process has beencompleted. The interest will continue to be payable until the debt ispaid, without the necessity of a written warning or reminder RATE OF INTEREST The interest race will be the European Central Bankrefinancing rate plus 7 percentage points. Parties to a contract may agree an alternative interest rate.  The ECB rates in force on 1st January and 1stJuly apply for the following six months in each year.  Only one rate will apply to a late payment,that is the race in force on the payment date. The EU Directive The Commission proposed a Directive in March 1998. Theeconomic rationale behind the Commission's proposal lies in the fact that oneout of four insolvencies is due to late payment. This leads to the loss of 450 000jobs each year, adding to the high level of unemployment in Europe.In addition, outstanding debts worth € 23.6 billion are lost every year throughthe insolvencies caused by late payment. When Will the new 2010 Directive Take Effect? Whilst this new EU Directive is to be welcomed, anythingthat can focus on debtor's  paying theirdebts on time can only help these businesses waiting to get paid but it seemsthat whilst this new law will likely be adopted in the coming weeks, the  27 Member States will have until early 2013 totranspose these provisions into domestic law. We need this new law today and 2013is just too late!Brian Walker Normal 0 MicrosoftInternetExplorer4 st1\:*{behavior:url(#ieooui) } /* Style Definitions */ table.MsoNormalTable{mso-style-name:"Table Normal";mso-tstyle-rowband-size:0;mso-tstyle-colband-size:0;mso-style-noshow:yes;mso-style-parent:"";mso-padding-alt:0in 5.4pt 0in 5.4pt;mso-para-margin:0in;mso-para-margin-bottom:.0001pt;mso-pagination:widow-orphan;font-size:10.0pt;font-family:"Times New Roman";}