SMEs warn that late payments are becoming entrenched

BarcelonaLate payments aren't disappearing. Despite various regulations, the obligation to pay suppliers within a maximum of sixty days is not met by many companies, which have payment terms that can even exceed three hundred days. The Multisector Platform against Late Payment (PMcM), which claims to represent around one million SMEs and self-employed workers and is led by the Catalan employers' association Pimec, has once again warned about this and emphasizes that late payments are a "structural and widespread" problem in the Spanish business world. It is also a veritable "time bomb" that the European Commission wants to defuse through a regulation that includes reducing payment terms to thirty days, with caveats; an automatic sanctioning system; and the creation of national supervisory authorities. However, it has not yet been implemented.

It is precisely the lack of a penalty model that is actually applied to late payers that often prevents payments from being adjusted to the legally established deadline. "Far from being anecdotal, this practice has become a common element of the business model of many companies, especially large ones," warns the PMcM. The truth is that "paying late has become institutionalized. For some companies, it is a covert way of financing themselves at the expense of their suppliers," denounces Antoni Cañete, president of the PMcM and also of Pimec. In a country where 99.8% of the business fabric is made up of small and medium-sized enterprises, this situation poses "a systemic threat to survival," he asserts.

According to data from the Bank of Spain, in the second half of 2024, the average payment term among listed companies reached 136 days. Sectors such as "Information and Communications" and "Other" reached alarming figures of 252 and 309 days, respectively, far below the legal limit of 60 days. This situation "directly affects the liquidity of SMEs, reduces their investment capacity, and makes them more vulnerable to any economic crisis," explains the president of the PMcM.

The latest PMcM report concluded that during 2024, the average payment period for the public sector increased by twelve days, reaching sixty-seven days, while that of the private sector decreased by six days, to an average of sixty-four days. Both violate Law 15/2010, which sets the legal maximum at thirty days for public administrations and sixty days for companies. Cañete considered it "alarming" at the first meeting of the Late Payment Observatory that the payment period for public administrations would exceed that of companies in 2024 for the first time since 2014.

"Ineffectiveness" of the current legal framework

He also highlights the "ineffectiveness" of the current legal framework. Directive 2011/7/EU, which establishes maximum payment periods between companies and public authorities, "lacks effective supervision and sanction mechanisms. Public administrations, which should be exemplary, do not always meet the deadlines, and controls over payments to subcontractors,

The regulation proposed by the European Commission aims to replace the current directive. national supervisory bodies, during its passage through the European Parliament, some sectoral exceptions have been introduced "that could lengthen the deadlines in justified situations, such as low-rotation or seasonal products." The PMcM believes that, although these exceptions may respond to certain economic realities, they also "run the risk of weakening the objective."

The text is now being discussed by the European Council, where cultural and economic differences between countries have generated opposing positions. the effectiveness of this regulation will depend on Member States applying it "firmly, providing the means to supervisory authorities and not giving in to sectoral pressures that seek to maintain the'status quoThe key question is whether Europe will seriously protect small businesses or allow itself to be dragged down once again." At the national level, the PMcM highlights the measure recently adopted by the Generalitat de Catalunya (Catalan government) to make direct payments to subcontractors carrying out the work.Report on Late Payments in Spain 2024, prepared by the PMcM, subcontractors are paid within an average of 88 days, largely violating legal deadlines.

In this sense, Cañete believes that this measure should be extended to all public administrations in Spain and serve as an example at the European level. "It's an effective tool for reducing late payments and improving the liquidity of the most vulnerable companies," he concludes.