In times of recession, small businesses are often hit hardest. Even when business is booming, staying in the red can involve a precarious balancing act; when finances are stretched, leaving little margin for error, just one or two unpaid invoices can send small companies into a tailspin.
The EU Late Payment Directive – introduced back in 2000 on the cusp of the current downturn – aims to offer these enterprises a degree of protection by ensuring that commercial debts are paid on time. Roberto Leccese, of Studio Legale Ughi e Nunziante, reports that the Directive was recently implemented in Italy, replacing a previously relaxed approach to delayed payments with tough new rules on rates and accrual of interest. The modest statutory default interest rate of 3% has been hiked to a stiffer 9.85% and a reminder need no longer be sent before interest becomes payable. Instead, interest will accrue 30 days after receipt of the invoice or the goods or services, whichever is the later.
