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© Alberto Favaro

EC Representation in Malta

What is the Late Payments Directive all about?
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15/02/2013 12:56:28

Late payments could constitute a major obstacle to the free movement of goods and services in the single market and could substantially distort competition. The subject was addressed during an informative seminar organised on the 14th February by the European Commission Representation in Malta together with the Malta Association of Credit Management (MACM). It brought together a good number of stakeholders to discuss the rationale behind the Late Payments Directive and its implementation in Malta.

    In his introductory comments, Mr Martin Bugelli, Head of the Commission Representation, explained that the event was part of an information campaign lead by the European Commission in all EU Member States. The aim, he said, was to increase awareness amongst stakeholders, in particular SMEs and public authorities, on the new rights conferred by the Directive.

    MACM President Dr Louis Bianchi pointed out that throughout Europe, Malta included, public authorities are not leading by example, often paying later than business customers. He recalled that in this scenario SMEs are the most vulnerable, hence the need for proper implementation of the rights conferred by EU law.

                                                                                                                                                                                   

    The main presentation as delivered by Ms Idaira Robayna Alfonso from the European Commission's Directorate-General for Enterprise and Industry. She said that the Directive is expected to have a stronger impact than the previous legislation that concerns late payments. The Directive concerns business-to-business, and business-to-government relationships, not consumer payments and the aim is to help businesses maintain a healthy cashflow. Ms Robayna Alfonso highlighted the cultural differences in the length of payments in Europe, with extremes varying between 25 days and 180 days. She also congratulated Malta on being one of the first countries together with Cyprus, Italy, Ireland and the Netherlands, to transpose the new Directive (i.e. to introduce it through Maltese law). 

                                                                                                        

    Representing the public sector, Mr Herald Bonnici, Director-General (Financial Policy and Management) within the Ministry of Finance, Economy and Investment, said that the average payment duration by public authorities in Malta is 89 days. He gave an overview of the process that led to the transposition of the Directive into Maltese law, from the initial public consultation up to the introduction of the relevant Legal Notice (LN 272 of 2012).

    Josef Busuttil, Director-General of MACM shared the views of his associatoin on the practical aspects of implementation of the legislation. He welcomed the revised Directive as an improvement on the EU's first attempt at curbing late payments. However, he pointed out that the Directive on its own would be ineffective unless the causes of late payments are addressed. This, he said, include undercapitalisation, mismanagement and overtrading. It is necessary to change the late payment culture through education, proper credit management information systems and adequately funded firms. In other words, good credit management practice is key, Busuttil emphasised.

    The private sector perspective was presented by Charles Xuereb, Chief Financial Officer at Simonds Farsons Cisk, who said that although legislation is not a remedy to the problem, it is a step in the right direction that creates an environment that is conducive to more timely payments. He mentioned the practical difficulties in enforcing the Directive, particularly in Malta, where often businesses are reluctant to charge interest on payments, or to seek judicial redress.

    The presentations were followed by an interesting discussion, chaired by Mr Bugelli, touching on various aspects of the Directive. Participants voiced their appreciation towards the legislative initiaitve, as well as their views on the difficulties SMEs face in asserting their rights in practice.

    Around 170 people, mostly coming from SMEs and public entities, attended the seminar which was held at the Hotel Excelsior in Floriana.

    Last update: 15/02/2013  |Top