EuroCommerce, the European association representing retailers and wholesalers, expressed concerned about the ‘solution’ tabled by the European Parliament on the Late Payments Regulation.
The European Parliament’s Internal Market and Consumer Protection (IMCO) committee adopted its position on the Late Payments Regulation as MEPs agreed on capping payment terms at 30 days, extendable to 60 days if parties expressly agree to do so in the contract.
Moreover, payment terms for slow-moving and seasonal goods may be up to 120 days.
Commenting on the outcome of the vote, EuroCommerce director general, Christel Delberghe said, “Trying to achieve the valiant aim of creating a culture of prompt payment should not come at any cost. The solution the IMCO Committee has chosen will cause huge legal uncertainty with vague definitions that guidance is unlikely to clarify.
“We welcome the attempt to address the problems faced by retailers selling slow-moving or seasonal products, but capping payment terms remains the wrong solution to the problem of non-compliance with contracts.”
Late Payments Regulation
EuroCommerce added that the proposed 'solution' is irrespective of the desire of companies to negotiate payment terms that enable them to continue their mutually beneficial business relationships and will not solve the problem of late payments.
The association's #FlexNotFixed campaign shows that trying to set bespoke payment terms top-down, removed from business reality, creates more complexity and threatens the existence of some, such as small bookshops.
It will also deny access to supplier credit that wholesalers offer as an alternative source of finance for their customers, leaving a financial gap, EuroCommerce noted.
Furthermore, it will expose any business with inventory to competition from online intermediaries and elevate market entry barriers.
The retail and wholesale association added that it remains hopeful that a more sensible approach will be taken by the European Parliament plenary and the Council to reinstate freedom of contract without changes that should be thoroughly impact assessed.
