The issue of “late payment in commercial transactions” is governed by the European Communities (Late Payment in Commercial Transactions) Regulations 2012 - SI 580 of 2012.
The purpose of these Regulations is to give legal effect to Directive 2011/7/EC of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions
These Regulations repeal, with effect from 16 March 2013, the European Communities (Late Payment in Commercial Transactions) Regulations 2002 (SI 388 of 2002).
Under these Regulations, (SI 580 of 2012), it is an implied term of every commercial transaction that where a purchaser does not pay for goods or services by the relevant payment date, the supplier shall be entitled to interest (“late payment interest”) on the amount outstanding. Interest shall apply until such time as payment is made by the purchaser.
The Regulations apply to commercial transactions in both the public and private sector.
Main provisions of the legislation:
- Public Authorities must pay for the goods and services that they procure within 30 calendar days, or in very exceptional circumstances, within 60 calendar days.
- Contractual freedom in Businesses to Business commercial transactions: Business should pay their invoices within 60 calendar days. Where the date of payment exceeds 60 calendar days, the payment date must be expressly agreed in the contract and not grossly be unfair to the creditor
- In the absence of any agreed payment date between the parties (i.e. specified in the contract), late payment interest falls due after 30 days has elapsed, provided the invoice is not subject to query.
- Enterprises are automatically entitled, without the necessity of a reminder, to interest for late payments
- Where late payment interest falls due, the supplier is also entitled to the automatic payment of compensation costs.
- Statutory interest rate for late payment is 8 percentage points above the European Central Bank’s reference rate.
- Enterprises can challenge grossly unfair terms and practices.
For more information about these Regulations, please see our Late Payments FAQs.
If you require further information on the issue of “late payments”, please send an email to the dedicated mailbox email@example.com where your query will be dealt with.
While the SME Policy Unit provides information in respect of late payments, it is important to note that is not their function to provide legal advice. Where specific interpretations of the Late Payment Legislation are required, it is recommended that these be sought from parties with the appropriate expertise within the legal profession.