What changed between the draft committee report and the plenary report

Added:Recital 11: (11) Late payment constitutes a breach of contract which is financially attractive to debtors, due to low or no interest rates charged on late payment, or slow procedures for redress. A decisive shift to a culture of prompt payment, including one in which the exclusion of the right to charge interest for late payment is null and void, is necessary to reverse this trend and to discourage late payment. Consequently, contractual payment periods should be limited to 30 calendar days both in B2B transactions and G2B transactions, where the public authority is the debtor. This shift is also needed to limit the so-called ‘fear factor’ that micro and small undertakings suffer when they have a credit with bigger companies and that often brings such creditors to accept longer payment periods than they are comfortable with against the promise of future business. At the same time, additional flexibility should be granted to the undertakings so they can benefit from the freedom of contract and negotiate a longer payment period up to 60 calendar days. This extended payment period should be possible when it is mutually beneficial for the creditor and the debtor. Electronic invoicing can also be a helpful tool in shortening the payment period, as it would help creditors to prove the date of receipt of the invoice in the event of doubt or dispute.

Added:Recital 11 a (new): (11a) Against this background, it is necessary to acknowledge the existence of certain business models and industry practices within the retail sector which aim to keep slightly longer payment periods. As these practices reflect low rotation and seasonality of certain product categories, as well as unique operating cycles of some slow-moving cultural goods, such as toys, jewellery, sporting equipment or books, and are mutually beneficial for the creditors and the debtors, it is desirable to allow a limited flexibility in this matter so that the contracting parties can benefit of up to 120 calendar days payment period.

Removed:Recital 26 a (new): (26a) In order to increase transparency and improve enforcement of this Regulation, new requirements with regard to reporting obligations on payment practices by large undertakings should be introduced.

Added:Recital 22: (22) To enhance the efforts to prevent the abuse of freedom of contract to the detriment of creditors, organisations officially recognised as representing creditors or organisations with a legitimate interest in representing undertakings should be able to take action before national courts or administrative bodies in order to prevent late payments and to end contractual terms and practices that are null and void.

Added:Recital 23: (23) To guarantee full payment of the amount due, it is important to ensure that the seller retains the title to goods until they are fully paid for, if a retention of title has been expressly agreed between the buyer and the seller before the delivery of the goods. To take into account the specificities of certain goods characterised by their slow rotation, retention of title can also be used by sellers to provide extended credit to their buyers in a manner that remains consistent with this Regulation, as for example in consignment sales.

Added:Recital 24: (24) To ensure correct application of this Regulation, it is important to provide transparency regarding the rights and obligations as laid down by this Regulation. To ensure that the correct rates of interest are applied, it is important that they are made public by the Member States and the Commission. In order to contribute to the achievement of the objective of this Regulation, Member States should increase awareness of the remedies for late payment among undertakings through publications and campaigns and should foster the spread of good practices.

Added:Recital 25: (25) The sanctions for late payment can be dissuasive only if they are accompanied by procedures for redress which are rapid and effective for the creditor. Expedient recovery procedures for unchallenged claims should therefore be available to all creditors who are established in the Union, in accordance with the principle of non-discrimination set out in Article 18 of the Treaty on the Functioning of the European Union (‘TFEU’).

Added:Recital 26: (26) To facilitate and ensure compliance with this Regulation, Member States should designate independent authorities responsible for its enforcement, which perform their duties and tasks in an objective and fair manner and ensure equal treatment of private undertakings and public authorities. Those enforcement authorities should carry out investigations on their own initiative, act on complaints, including anonymous complaints or notifications, and be empowered, among other things, to impose sanctions and publish their decisions on a regular basis. In addition, for more effective enforcement, Member States should use digital tools in order to facilitate this process. The Commission should assess how the enforcement authorities carry out the tasks conferred to them by this Regulation.

Added:Recital 27: (27) To ensure easy and accessible means of redress, Member States should promote the voluntary use of effective and independent alternative dispute resolution mechanism to solve payment disputes in commercial transactions. Member States could designate their respective chambers of commerce and industry as bodies responsible for alternative dispute resolution, provided that they can demonstrate impartiality and independence from the parties. As parties may engage in negotiations to reach an amicable settlement regarding disputed debts, such settlements may involve the adjustment of interest and compensation claims, provided they are in compliance with principles of fairness and do not unduly disadvantage the creditor.

Added:Recital 27 a (new): (27a) In view of the need to enhance transparency and accountability in commercial transactions, and in line with the objectives of promoting responsible financial management and fair business practices, it is imperative to introduce specific reporting obligations for contracting authorities as described in Article 2(1) of Directive 2014/24/EU. Contracting authorities should report annually on their payment practices, providing detailed insights into the promptness of their payments. A structured approach to reporting is necessary to foster greater transparency in payment practices and to assist in identifying areas where improvements are needed. The reporting obligation should include the disclosure of amounts, in euros, paid within various time frames after the payment deadline set out in this Regulation. The detailed reporting should include categorising payments made in intervals of 1 to 30 days, 31 to 60 days, 61 to 90 days, and beyond 90 days after the stipulated payment deadline, and the average time taken to pay an invoice should be part of the report. To ensure that the information is not only used for regulatory compliance but also serves as a tool for public scrutiny and encourages best practices in payment disciplines, the reports should be made publicly accessible and should be submitted in an electronic format to the relevant Member State enforcement authority.

Added:Recital 28: (28) Invoices trigger requests for payment and are important documents in the chain of transactions for the supply of goods and services, inter alia, for determining payment deadlines. It is important to promote systems that give legal certainty as regards the exact date of receipt of invoices by the debtors, including in the field of e-invoicing where the receipt of invoices could generate electronic evidence and can also help to improve compliance with VAT obligations, and which is partly governed by the provisions on invoicing contained in Council Directive 2006/112/EC49 and Directive 2014/55/EC50 of the European Parliament and the Council.

Added:Recital 28 a (new): (28a) The gradual introduction of compulsory e-invoicing can reduce payment times, increase payment control and encourage the digital transition of SMEs. National authorities should support SMEs by ensuring adequate infrastructure and support.

Added:Recital 29: (29) Effective access of undertakings, especially of micro-enterprises and SMEs, to credit management, including financing services, and financial literacy training can have a significant impact in reducing payment delays, maintaining optimal cash flows, reducing the risk of default and increasing the potential for growth. Nevertheless, micro-enterprises and SMEs often lack the capacity to invest in such training, while very limited trainings and training material focusing on enhancing micro-enterprises and SMEs’ knowledge of credit and invoice management are currently available. It is therefore appropriate to provide that Member States need to ensure that invoice management, credit management tools, including factoring and financial literacy trainings are available and accessible to micro-enterprises and SMEs, including on the use of digital tools for timely payments and financing services.

Added:Recital 29 a (new): (29a) Recognising the critical impact of late payment practices on the European Union's economic environment and in order to enhance transparency, compliance, and best practices, the Commission should establish the European Observatory of Late Payments (‘the Observatory’). The Observatory should be a key element in monitoring, analyzing, and sharing insights on payment behaviors across the Union with a primary function to monitor both timely and delayed payment practices, gathering and disseminating expertise, identifying best and potentially harmful practices, and evaluating the effectiveness of enforcement authorities in their regulatory roles. The Observatory's focus should be on providing the Commission with ongoing advice and expertise crucial for understanding and shaping the evolution of payment and late payment practices within the Union. To facilitate comprehensive monitoring and effective functioning, Member States should communicate essential information to the Observatory, including lists of goods and services subject to specific payment procedures, aggregated data from relevant articles, and details regarding enforcement actions and outcomes. The Observatory, chaired by the Commission and composed of a balanced representation of experts and stakeholders, should issue annual reports, opinions, and contributions pertinent to implementing and enforcing this Regulation. The outputs should reflect the state of payment practices and offer guidelines and recommendations…

Added:Recital 29 b (new): (29b) To assess and ensure the effectiveness of this Regulation, the Commission should comprehensively evaluate its implementation and impact through a comprehensive report. Given the dynamic nature of commercial transactions and the evolving market conditions, the report should be a crucial tool in understanding the Regulation's effectiveness and identifying areas for improvement. The Commission, based on the findings of the report, should be prepared to accompany it with a legislative proposal if considered to be necessary and appropriate, ensuring that the Regulation remains relevant, effective, and aligned to promote fair and efficient payment practices within the Union. Therefore, four years after the entry of this Regulation into force, and subsequently every three years, the Commission should submit a report to the European Parliament and the Council, which will maintain transparency, evaluate the progress, and make necessary adjustments to the Regulation. The report should examine the impact of the scope of this Regulation, focusing on its effects across specific sectors and business models, and provide insights into how the Regulation influences diverse commercial landscapes. The report should evaluate the impact of measures implemented, especially those related to payment periods, on enhancing cash flow and liquidity in the market to shed light on the practical effectiveness of these measures in improving financial dynamics. The report should also assess the effecti…

Added:Recital 30: (30) Certain provisions in this Regulation are linked to the provisions in Directive (EU) 2019/633 of the European Parliament and of the Council51 . The relationship between Directives 2011/7/EU and (EU) 2019/633 is explained in recitals (17) and (18) and Article 3(1) of Directive (EU) 2019/633. As this Regulation replaces Directive 2011/7/EU, it should not affect the rules laid down in Directive (EU) 2019/633, including the provisions that are applicable to payments made in the context of the school scheme52 , value-sharing agreements53 and certain payments for the sale of grapes, must and wine in bulk in the wine sector54. However, this Regulation does not prevent the Member States from introducing or maintaining national provisions applicable in the agricultural and food sector which provide for stricter payment terms, or different calculation of payment periods, dies a quo and verification and acceptance procedures for suppliers of agricultural and food products that are more favourable to the creditor.

Added:Recital 31: (31) The objectives of this Regulation are 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 micro-enterprises and SMEs. Those objectives cannot be sufficiently achieved by the Member States, as implementing national solutions would likely result in a lack of uniform rules, fragmentation of the single market and higher costs for companies trading across borders. Therefore, those objectives can be better achieved at Union level. The Union may therefore adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary to achieve those objectives.

Removed:Article 3 – paragraph 3: 3. Where the contract provides for a procedure of acceptance or verification, in accordance with paragraph 2, for the purposes of this Regulation, the maximum duration of that procedure shall not exceed 30 calendar days from the date of receipt of the goods or services by the debtor, even if such goods or services are supplied prior to the issuance of the invoice or an equivalent request for payment. In this case, the debtor shall initiate the procedure for acceptance or verification immediately upon reception from the creditor of the goods and/or the services that are the object of the commercial transaction. The payment period shall not exceed 30 calendar days after such procedure has taken place. / Notwithstanding the first subparagraph of this paragraph, a procedure of acceptance or verification lasting longer than 30 days may be provided for in national law. However, such longer duration is without prejudice to the provisions on the payment period referred to in this Article.

Added:Article 1 – paragraph 3 – subparagraph 1 a (new): Notwithstanding point (b), payments made in performance of the obligations stemming from insurance contracts are covered by this Regulation.

Added:Article 1 – paragraph 4: 4. This Regulation shall not affect the provisions laid down in Directive (EU) 2019/633.

Added:Article 2 – paragraph 1 – point - 1 (new): (-1) ‘commercial transactions’ means transactions between undertakings or between undertakings and public authorities which lead to the delivery of goods or the provision of services for remuneration;

Added:Article 2 – paragraph 1 – point 2: (2) ‘public authority’ means any contracting authority, as defined in Article 6(1) of Directive 2014/23/EU, Article 2(1), point (1), of Directive 2014/24/EU or in Article 3(1) of Directive 2014/25/EU regardless of the subject or value of the contract;

Added:Article 2 – paragraph 1 – point 3: (3) ‘late payment’ means a payment of an amount due that is not made within the contractual or statutory payment period as set out in Article 3;

Added:Article 2 – paragraph 1 – point 7: (7) ‘procedure of acceptance or verification’ means the procedure for ascertaining the conformity of the goods delivered or services provided, with the requirements of the contract, as well as the verification of the correctness of the invoice and its conformity with those requirements;

Added:Article 2 – paragraph 1 – point 8: (8) ‘debtor‘ means any natural or legal person or any public authority that owes a payment for a good delivered, or to be delivered, or a service provided, or to be provided;

Added:Article 2 – paragraph 1 – point 9: (9) ‘creditor‘ means any natural or legal person that delivered, or is obliged to deliver, goods to a debtor or provided, or is obliged to provide, services to a debtor.

Added:Article 2 – paragraph 1 – point 9 a (new): (9a) ‘large undertaking’ means an ‘undertaking’ as defined in Article 3, point (4), of Directive 2013/34/EU;

Added:Article 2 – paragraph 1 – point 9 b (new): (9b) ‘slow-moving goods’ means goods in the retailer’s possession, from actual supply by the manufacturer or the wholesaler to final retail sale, for more than 60 days on average;

Added:Article 2 – paragraph 1 – point 9 c (new): (9c) ‘seasonal goods’ means goods the demand for which increases, in a significant manner, regularly at certain times or seasons of the year;

Added:Article 3 – paragraph 1: 1. In commercial transactions, the payment period shall not exceed 30 calendar days, from the date of the receipt of the invoice or an equivalent request for payment by the debtor, provided that the debtor has received the goods or services in accordance with contractual agreement. Where the date of the receipt of the invoice or the equivalent request for payment is uncertain, the payment period shall not exceed 30 calendar days from the date of receipt of the goods or services. This period shall apply both to the transactions between undertakings and between public authorities and undertakings.

Added:Article 3 – paragraph 1 a (new): 1a. In commercial transactions between undertakings, where expressly agreed in the contract, the payment period referred to in paragraph 1, may be extended up to 60 calendar days.

Added:Article 3 – paragraph 1 b (new): 1b. By way of derogation from paragraph 1, in transactions between undertakings for the purchase of slow moving or seasonal goods, the payment period may be extended up to 120 calendar days from the date of the receipt of the invoice or an equivalent request for payment by the debtor, provided that the debtor has received the goods. / Prior to the date of application of this Regulation, the Commission shall adopt and publish technical guidance documentation concerning the practical details for the application of this paragraph as regards the goods falling under the definition of slow moving goods laid down in Article 2(9b) and the definition of seasonal goods laid down in Article 2(9c). Such technical guidance documentation shall in particular address diverging payment practices put in place by different economic operators consisting in a risk of fragmentation of the internal market.

Added:Article 3 – paragraph 2: 2. A procedure of acceptance or verification, by which the conformity of the goods or services with the contract is to be ascertained, may be provided for in national law where strictly necessary due to the specific nature of the goods or services. In that case, the contract shall describe the details of the procedure of acceptance or verification, including its duration.

Added:Article 3 – paragraph 3: 3. Where the contract provides for a procedure of acceptance or verification, in accordance with paragraph 2, for the purposes of this Regulation, the maximum duration of that procedure shall not exceed 30 calendar days from the date of receipt of the goods or services by the debtor, even if such goods or services are supplied prior to the issuance of the invoice or an equivalent request for payment. In this case, the debtor shall initiate the procedure for acceptance or verification immediately upon reception from the creditor of the goods and/or the services that are the object of the commercial transaction. The payment period shall not exceed 30 calendar days after such procedure has been concluded or after receipt of the invoice, or an equivalent request for payment, if the latter takes place later.

Added:Article 3 – paragraph 4: 4. The payment period set out in paragraph 1, 1a and 1b is the maximum payment period and is without prejudice to a shorter period which may be provided for in national law.

Added:Article 3 – paragraph 4 a (new): 4a. Member States shall introduce appropriate measures to improve public authorities payment practices towards undertakings. In this regard, Member States shall consider introducing measures to ensure that an undertaking which is a creditor within the meaning of Article 2(9) is able to obtain upon request to the public authority, which has not paid the amount due within the maximum payment period set out in paragraph 1, the offsetting of the amount due against any outstanding amount that the creditor has towards the same public authority.

Added:Article 5 – paragraph 1: 1. In case of late payment, the debtor shall pay interest for late payment to the creditor, except where the debtor is not responsible for the payment delay.

Added:Article 5 – paragraph 3: 3. It shall not be possible for the creditor to waive its right to obtain interest for late payment when the debtor is a public authority or a large undertaking.

Added:Article 5 – paragraph 6 – introductory part: 6. Where the conditions set out in paragraph 2 are satisfied, interest for late payment shall start accruing from the day following the expiry of contractual or statutory payment period and in accordance with Article 3. / (deleted) / (deleted)

Added:Article 5 – paragraph 7: 7. The interest for late payment shall accrue until the creditor receives payment of the amount due.