Damien English (Meath West, Fine Gael)
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To ask the Minister for Jobs, Enterprise and Innovation if he will detail when he proposes to transpose Directive 2011/7/EU on the new late payments directive into Irish law; if he will detail the way this directive may help small and medium enterprises; and if he will make a statement on the matter. [3363/13]

Richard Bruton (Dublin North Central, Fine Gael)
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Prompt Payments for goods and services rendered is critical to the effective working of any economy and is an issue on which this Government places great emphasis.

The reduction in the number of late payments in commercial transactions is one of the ten principles cited in the Small Business Act for Europe as a means to help SMEs to deal with the difficult market conditions currently being experienced.

At present the issue of late payment is covered by the European Communities (Late Payment in Commercial Transactions) Regulations 2002 (S.I. No. 388 of 2002). Under these Regulations, 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.

Ireland must transpose the Recast of the Late Payment Directive (2011/7/EU) which repeals and modernises the old rules. I signed the Statutory Instrument transposing Directive 2011/7/EU on 22 December 2012 and this will come into effect on 16 March 2013.

The purpose of the recast Directive is to combat late payment in commercial transactions, in order to ensure the proper functioning of the internal market, thereby fostering the competitiveness of undertakings and in particular of SME’s.

Directive 2011/7/EC lays down the specific deadlines for the payment of invoices and establishes a right to compensation in the event of late payment in all commercialtransactions, whether they relate to transactions between private or public undertakings, or between undertakings and public authorities. Member States may exclude debts that are subject to insolvency proceedings, including proceedings aimed at debt restructuring.

Main Provisions:

EU Member States shall ensure that if the date or period for payment is not fixed in the contract, the creditor is entitled to interest for late payment upon the expiry of any of the following time-limits:

- 30 calendar days following the date of receipt by the debtor of the invoice or an equivalent request for payment;

- If the date of the receipt of the invoice or the equivalent request for payment is uncertain, 30 calendar days after the date of receipt of the goods or services.

In addition, Member States shall ensure that:

- The maximum duration of the procedure of acceptance or verification does not exceed 30 calendar days from the date of receipt of the goods or services, unless otherwise expressly agreed in the contract and provided it is not grossly unfair to the creditor;

- The period for payment fixed in the contract does not exceed 60 calendar days, unless otherwise expressly agreed in the contract and provided it is not grossly unfair to the creditor.

In practical terms, this translates into the following operational objectives: (1) Confront debtors with measures that successfully discourage them from paying late; (2) Provide creditors with measures that enable them to fully and effectively exercise their rights when paid late, and (3) Create a level playing field across Member States.

The Directive, will contribute significantly to the liquidity of enterprises and therefore to employment and growth.

The proposed legislation will act as a deterrent to late payment and a driver for payment on time by establishing a clear expectation in law that payment will be made according to agreed terms that creditors will not be penalised financially when paid late and debtors will not benefit.

Prompt Payment compliance will assist SME’s improve their cash flow situation and will ease the credit difficulties being experienced by business and facilitate their long term sustainability.