EuroCommerce, the European association representing retailers and wholesalers, has expressed serious concern about the proposed European regulation on late payments, stating that its impact will be disproportionate and dramatic if the proposal is not reconsidered.

Excessive Restriction

Juan Manuel Morales, President of EuroCommerce, explained, "The Commission's proposal goes far beyond addressing late payments by excessively restricting payment terms. This will reduce the flexibility and capacity of retail and wholesale to invest and will create a financial gap of up to 150 billion euros. It will be a huge problem for large companies. But even worse, it will affect the millions of SMEs contributing to the development of our local communities."

The proposed regulation, introduced by the European Commission last month, represents an absolute restriction on the freedom to negotiate payment terms beyond 30 days, according to EuroCommerce. It added that no EU country has such drastic rules, and countries with stricter requirements, such as the Netherlands, have some form of exemption or flexibility.

"Review the Proposal"

Christel Delberghe, Director General of EuroCommerce, added, "Given the footprint of our sector, its impact goes far beyond retail and wholesale, affecting Europe's economic resilience, prices, consumer choices, and fair competition with online intermediaries outside the EU. We urge EU institutions not to rush this and to seriously reconsider the proposal to ensure that we can address late payments without interfering with the freedom to negotiate payment terms."

The regulation will massively benefit large suppliers, many of which are global players established outside the EU, according to EuroCommerce. Eliminating the negotiation of payment terms will pose additional challenges for European SMEs, limit what they can offer to consumers, and hinder the opening of new business avenues or stores.

The provision to negotiate payment terms allows distributors to start selling before paying suppliers. This helps retailers stock popular products and alternatives to offer customers a diverse range at affordable prices. It also allows wholesalers to support their business clients by providing credit and flexibility for their operations.

Retail and Wholesale Trade in Europe

The retail and wholesale trade sector represents one in five businesses and one in four SMEs in Europe, making it the largest private employer on the continent and a major contributor to local communities.

EuroCommerce added that the regulation will impact the ability of SMEs and large companies to invest in sustainability, digital transition, and sector skills, estimated by McKinsey to be around 600 billion euros by 2030.