EU member states must make sure all bills are paid promptly as part of efforts to help struggling small- and medium-sized companies, the backbone of the economy, the European Commission said Tuesday.
From Saturday, all 27 European Union countries will have to apply a Late Payment Directive intended to help SMEs as mounting unpaid bills put jobs and businesses at risk.
Under the directive, public authorities must pay for goods and services within 30 calendar days or, in very exceptional circumstances, within 60 days.
Businesses have 60 calendar days, unless agreed otherwise and "if it is not grossly unfair to the creditor," a statement said.
To encourage compliance, companies can automatically claim interest on late payments, set at not less than 8.0 percentage points above the European Central Bank’s benchmark rate, it said.
It said public authorities must apply the new rules but companies still have the right to make their own arrangements if they wish to do so.
"Late payments mean SMEs lose time and money, and disputes can sour relations with customers. This damaging late payment culture has to end," EU Industry Commissioner Antonio Tajani said in the statement.