European Communities (Late Payment in Commercial Transactions) Regulations 2012

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IrelandTogether’s member Grace Boland writes an informative article on legislation aimed at penalising businesses who miss payment deadlines in B2B transactions

What is it? 

This legislation is aimed at combating late payments in B2B, commercial transactions and provides that  penalty interest and compensation will become payable if payments 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 payments 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 €40 

Exceeding €1000 but not exceeding €10,000 €70 

Exceeding €10,000 €100 

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 invoices. 

• 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 times that client  made late payments over the last 6 years and consider now charging them the interest and 

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 Boland Law at: 
T: 01 546 1072 E:  

Vithoria Escobar

Masters educated Public Relations and Marketing professional, with seven years international experience planning and managing strategic communications. Results-driven, with substantial knowledge across multiple industries and markets, including Digital, Technology, Corporate and Public Affairs. Available for both permanent and temporary roles in Digital Marketing, Social Media, Content Creation & Public Relations.

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