The EU is planning shorter payment periods - how will this affect the financing costs for small and medium-sized companies?

The EU is planning shorter payment periods - how will this affect the financing costs for small and medium-sized companies?

According to a report by www.sueddeutsche.de, the German economy is resisting the EU Commission's plan to set a payment deadline of 30 days for all commercial transactions. According to the deputy general manager of the German Chamber of Commerce and Industry (DIHK), Achim Dercks, small and medium-sized retailers in particular could suffer massive financing costs as they often have to finance the purchase of goods in interim. The EU Commission, on the other hand, wants to use this new regulation to combat late payments and thus prevent financial difficulties for small and medium-sized companies.

The impact of this new regulation could be significant. Short payment terms could result in companies being forced to finance their purchases of goods, which could lead to liquidity problems and a greater need for credit. This in turn could place an additional burden on companies and endanger their financial stability.

Changing the deadline requirements could also restrict freedom of contract in the economy and reduce flexibility in agreeing payment deadlines for different business situations. This could lead to an increase in bureaucracy and further financial difficulties for companies.

The German trade association (HDE) also warns that rigidly setting payment deadlines at 30 days would not prevent late payments and would therefore help no one. Rather, this could place additional financial burdens on retailers, particularly if goods remain in store or warehouse for an extended period of time.

Overall, the implementation of this regulation could have a significant impact on the financial industry and the market as a whole. Rigid setting of payment deadlines could affect the liquidity of companies and create additional bureaucratic burdens, which could ultimately lead to financial problems and an impairment of contractual freedom. These potential impacts should be carefully considered to ensure that the interests of businesses and the economy as a whole are adequately taken into account.