Malta Chamber of SMEs welcomes the draft law for licencing of building, Insists on enforcement
16 March 2023
Speaking to ONE News Malta Chamber of SMEs CEO Ms Abigail Agius Mamo said that...
In the light of the current economic crisis which puts a massive strain on companies' finance, the last option for an increasing number of companies is to file for bankruptcy caused by late payments. Especially Small and Medium Sized Enterprises, whose often low liquidity makes them vulnerable to late payments, tend to fall victim to this development. Through this recast, the European Commission seeks to combat this trend by strengthening the existing Directive on late payments (2000/35/EG)
The recast Directive is proposed within the framework of the Small Business Act (SBA) which aims to improve conditions in which Small and Medium Enterprises operate. It aims to do so by trying to clear up ambiguities from the old Directive and making it easier for creditors to claim reimbursement- and administrative costs as well as interest. A main new element of the proposal is the fact that the Commission directly addresses public authorities, which are, according to research, responsible for 2/3 of the late payments.
The commerce sector acknowledges the efforts undertaken by the European Commission with regard to improving the framework conditions for SMEs in the European Union. The text however still does contain several provisions that raise concern to the commerce sector, and since the Directive was proposed within the framework of the Small Business Act, it will be more than sensible that the voice of the SME-retailers and the sector as a whole, is heard.
GRTU Malta Chamber of SMEs welcomes the Commissions determination to fight late payments and especially embraces the Commissions statement that governments and public authorities will commit to paying their suppliers on time, knowing that public authorities are responsible for 2/3 of late payments. Where late payments by businesses can, in rare cases, be caused by reasons outside their influence, late payments by public authorities can barely ever be legitimized. Public authorities deal with tax payer money and in fact paying late to businesses means that government is taking money from its citizens twice. In a period where the efficiency of public spending is highly scrutinized, together with the economic damage late payments by governments do to SMEs, there is no excuse for public authorities to pay late. This is why GRTU assumes that public authorities adhering to the rule of law will, by definition, pay the extra charges in case of late payment to which their debtors are legally entitled.
GRTU is sceptical regarding the shape of the proposed system that deals with the issue of recovery costs. In the proposed system, the recovery costs that can be claimed by the creditor, progressively rise in relation to the debt. In the proposed system, retrievable recovery costs of late payments of up to €1000,- are set at a fixed sum of €40,-. This implies that a company who is late with the payment of a sum of 4 euro's, can theoretically be obliged to pay the tenfold in recovery costs to its creditor, which seems disproportionate.
Finally GRTU is of the opinion that certain provisions in the Directive on contractual clauses constitute a threat to the freedom of contract within the context of business to business transactions. To the commerce sector the freedom of contract of B2B relations is essential, as trading credit (accompanied by the possibility to reach contractual agreements on payment terms exceeding 30 days) forms one of the sectors basic means of access to finance. Any minimum harmonization of payment terms, that does not take into account the nature of the product, its shelve life and the sector in which it is traded, is rejected by GRTU. The same goes for any minimum harmonization that does not make a distinction between SME suppliers with a weak market position and large suppliers, both local and international, with a strong market position. In this situation there is no justification for limiting the contractual freedom.
In line with this GRTU does not see the advantage of changing the status quo by enabling organisations other than those representing exclusively SMEs, to retrospectively challenge contractual clauses on which both parties have already agreed. The reason for this is that it poses a threat to SME-retailers, since it would also enable associations dominated by large producers to challenge contractual clauses. In the old directive this right is exclusively reserved for organisations representing SMEs.
The Late Payments Directive is very important for Maltese traders. However, GRTU is watchful to ensure that the changes will be of maximum benefit to SMEs and are not used to favour of the bigger supplier, at the detriment of smaller retailers and store owners. Government is also being warned that the main issue remains the late payment from the Public Authorities to the private suppliers and that all action should be geared to restore this major issue. This question is of maximum importance within the current economic situation where many SMEs face liquidity problems.
The Malta Chamber of SMEs represents over 7,000 members from over 90 different sectors which in their majority are either small or medium sized companies, and such issues like the one we're experiencing right now, it's important to be united. Malta Chamber of SMEs offers a number of different services tailored to its members' individual requirements' and necessities. These range from general services offered to all members to more individual & bespoke services catered for specific requirements.
A membership with Malta Chamber of SMEs will guarantee that you are constantly updated and informed with different opportunities which will directly benefit your business and help you grow. It also entails you to a number of services which in their majority are free of charge and offered exclusively to its members (in their majority all free of charge).