European Communities (Late Payment in Commercial Transactions) Regulations 2012 

What is it? 
This legislation is aimed at combating late payments in commercial transactions and provides that penalty 
interest and compensation will become payable if payment deadlines are missed. This EU wide law is 
aimed at improving cash flow for businesses, particularly SMEs but many do not know about it or are not 
sure how to exercise their rights under it. 
What you need to know: 
For commercial transactions, the general payment deadline is 30 days, unless the contract states otherwise. 
It is an implied term of every commercial transaction that the supplier is entitled to statutory late payment interest where the purchaser does not pay by the payment deadline. 
Interest is payable at 8 percentage points above the ECB rate. 
Where the contract provides for a payment term in excess of 60 days, such term must be “expressly agreed” and must not be “grossly unfair” to the supplier. The standard deadline for public authority payments is 30 days. 
Where late payment interest falls due, the supplier is also entitled to the automatic payment of 
compensation for expenses. 
Entitlement to Compensation for Expenses per Invoice: 
Amount of Late Payment (Invoice Value) 
Compensation Amount 
Not exceeding €1000  
Exceeding €1000 but not exceeding €10,000 
Exceeding €10,000 
Next Steps: 
If you are having issues with your clients missing their payment deadlines, as part of your invoice 
follow up procedure consider reminding them of your right to charge them interest and compensation, per invoice, for the late payment of any invoices over the last 6 years. 
Consider notifying customers that going forward all late payments will automatically attract the statutory interest and compensation. 
You need to weigh up the commercial relationship you have with your clients to decide whether or not it makes commercial sense to actually start charging them the late payment interest and compensation. 
Where the relationship has broken down, it might be worth reviewing how many late payments have been by that particular client over the last 6 years and consider now charging them the interest and compensation which you are entitled to. If they fail to pay and the total amount owed is considerable, you should consider taking legal proceedings to recover the money you are entitled to. 
Get in touch! If you would like to discuss how to use this legislation as a lever to ensure timely payment or would like to discuss how we can help your business, contact us at: 
T: 01 546 1072  
E: | 
This briefing is for general guidance only and should not be regarded as a substitute for professional legal advice. Legal advice should always be taken before acting on any of the matters discussed. 
Tagged as: EU Regulations
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