The Small and Medium Enterprises alert has been sounding. The Multisector Platform against Payment Delays (PMcM) has warned about proposed changes to payment terms being pushed by conservative groups in the European Parliament. They argue these amendments would be a backward step in the fight against late payments.
Specifically, the criticisms focus on the package of amendments put forward by the European People’s Party (EPP) and the European Conservatives and Reformists (ECR). Antoni Cañete, head of the platform, states that changes framed around the idea of “freedom of pact between the parties” could legally open the door to longer payment terms than those set by the rulebook.
According to PMcM, which includes around one million small businesses and self-employed workers, when the economically weaker side must finance the stronger, there is a lack of balance. The freedom to set payment deadlines may not be fair, so the law should consider the differences between contracting parties to ensure a neutral outcome. They warn that if payment terms were truly left to contract freedom, many companies would end up paying late, since doing so brings a substantial financial gain, especially in times of inflation and high interest rates.
The organization notes that other parliamentary groups had already reached consensus on nine compromise amendments. These changes largely remained aligned with the European Commission’s initial proposal and incorporated PMcM’s recommendations.
For Cañete, it is crucial to understand that implementing unrestricted pact freedom would roll back to the pre-2010 situation. That path risks perpetuating abuses of dominant positions by large companies.
Laying out a call to responsibility, PMcM asks European Parliament groups to act carefully and support, on the upcoming vote day, the compromise amendments agreed earlier, thanks to the leadership of the lead rapporteur, the MEP Roza Thun.
The conservative groups propose allowing longer payment periods beyond 30 days, provided it is clearly specified in the contract and the extension is not plainly unfair to the creditor. Cañete calls this a contradiction, noting that no party would put in a contract something deemed plainly unfair.
It should be remembered that the worst-paying and slowest-paying firms tend to be the larger ones, which often have corporate social responsibility codes. PMcM points to this as a reason for caution. One of the platform’s major backers is Pimec, the Catalan employers’ association led by Antoni Cañete. Therefore, adding an obligation to notify the payment exception to the enforcing authority would create additional administrative burdens, more bureaucracy for public administrations, higher costs for everyone, and an almost impossible level of oversight by that authority.
On the topic of evading the rule, PMcM highlights that the change would not automatically bar interactions between SMEs and large firms or public administration. Cañete argues that experience shows large companies can circumvent it by contracting through smaller intermediary firms or through joint ventures, which would require remedies by injured parties who often cannot bear the burden.
Additionally, the proposal would remove the control over payments to subcontractors in public procurement. This shift would hurt subcontractors who would see their invoices stretched out longer without any accountability from public administrations. In fact, public bodies in Spain have rarely shown interest in applying the rule that requires such oversight, as reflected in reports from independent regulatory offices overseeing contracting practices.