Late Payment - A New Directive - Same Old Result?

On the 20th of October the European Union voted in favour of a new Directive intended to combat late payment in commercial transactions within the Union. This Directive will replace the existing Directive (2000/35/EC).

Obviously, the intention of the new Directive is to ensure that suppliers are paid on time for the goods and services they supply. This is exactly what the existing Directive (2000/35/EC) was intended - and failed - to achieve.

Todays' copy of the Malta Business Weekly contains an article by Josef Busuttil FICM entitled 'Legislate or Educate?' Mr Busuttil believes that the new legislation will fail - and I agree with him. However, I cannot agree with his argument that 'education' is the answer.

It is a commercial reality that large companies are capable of exercising a great deal of power over small suppliers and can afford to dictate their own terms - and that any attempt by a small supplier to override those terms can result in that supplier being 'delisted'.

It is a commercial reality, too, that the only exceptions to that very unfair fact of life are small suppliers of products that large companies would find it difficult or impossible to obtain from any other supplier - and I think here in particular of specific brands of champagne or other 'luxury' goods.

Neither legislation nor education can succeed in changing this situation where a climate of fear exists, and - unsurprisingly - such a climate does exist.

Legislation certainly allows suppliers to complain of treatment that is, effectively, illegal, but few if any of them are prepared to risk the consequences of making a complaint and, whilst that is the case, large customers will remain ineducable.