Quarter of European bankruptcies blamed on late payments. What is the Commission doing about it?

One in four bankruptcies in Europe occurs because of late payments. Delays are hugely problematic for entrepreneurs - causing problems with salaries, investment and cash flow. And that's to say nothing of the emotional toll.

So how can the European Commission reverse this trend?

The cost of late payments - by businesses and public authorities - is massive. The annual cost to the European economy is more than the entire GDP of Finland. 

Fashion designer Caroline Dart runs a clothing business in France. Speaking to Business Planet, she explained the strain put on her company when businesses fail to make payments on time.

"We create regular small capsule collections, designed by me. We are now starting to develop the B2B, which is where we are selling to boutiques so it’s a new strategy with its strong points, and also its points that are less easy to manage," Caroline explained.

"If a store decided not to pay, we have a problem on our hands and if that’s multiplied across ten stores, then it really does become difficult, [and] stressful.

"When you are working on an entrepreneurial venture there is no guarantee you are going to get a salary at the end of each month. That’s the big difference. It takes a lot of time and effort to claw back that money… so if you knew that in any case after 30 days the invoice would be paid that would change radically, certainly for our stress levels, our capacity to sleep."

Chasing late payments costs European businesses €275 billion a year. And there’s a domino effect: every late payment causes another four.  

Retail, construction and the food supply chain are the sectors worse affected.

23 years ago, Europe introduced rules to protect creditors, especially small businesses. 

The Late Payments