The Late Payment Directive Recast

Late payment in commercial transactions between businesses and public authorities is a considerable challenge facing millions of EU businesses, in particular in the healthcare sector. Despite some success under the 2000 late payment directive, delays in payment of public hospitals are still a difficult issue not only but foremost for Europe’s SMEs. The recast of the late payment directive, a cornerstone of the EU small business act, will aim to reduce the number of late payments, shorten the payment period for public administrations and sustainably reinforce the incentives for public administrations to pay on time.

Public authorities constitute the vast majority of clients for the medical technology industry in Europe. Payment of public hospitals in some countries is delayed by more than 700 days and in others over 250 days. Moreover, as public health and quality of care are at stake, the sector feels ethically obliged to continue supply whether bills are paid or not. As this sector comprises 80% small to medium-sized enterprises this late payment behaviour results in huge problems, as they are extremely dependent on continuous and timely cash flow, not only to remain economically viable, but also to be able to reinvest part of their sales into R&D for developing best treatments for patients.

Several EU member states have already taken action to address late payments from public authorities however the European Commission is proposing to strengthen the nine year old directive by suggesting that public authorities in particular should lead by example and pay their bills within 30 days. Such an improved payment policy of public authorities would also build an important step out of the financial crisis in the EU.

The Parliament Magazine’s roundtable event looked at how to make a valuable contribution to the debate on the recast to the 2000 directive and highlighted the key role that SMEs, specifically in the medical technology industry, can and should play in the run up to the publication of the Parliament’s report and vote. There will be a dedicated editorial feature covering this debate.

John Wilkinson, Chief Executive, Eucomed
Impact of late payment on the medical technology sector

Liam Woods, Finance Director of the Health Service Executive (HSE) in Ireland
Hospital Management perspective (Good Practice Study)

Javier Vazquez, Director, Juvazquez
Medical Technology SME perspective

View photos from the Late Payment Directive debate