Late Payments in Commercial Transactions in the European Union: Are we Getting Better?

Transcription

1 European Journal of Scientific Research ISSN X / X Vol. 140 No 4 July, 2016, pp Late Payments in Commercial Transactions in the European Union: Are we Getting Better? Jovan Shopovski European Scientific Institute, ESI Abstract Over the years, late payments in commercial transactions have been recognized as one of the main problems of the EU companies, especially for Small and Medium sized (SMEs) ones. The European Union has made several efforts to solve this problem through legal regulations, which are supposed to accelerate the payment processes between companies. This descriptive paper is aimed at analyzing the current situation in the area of late payments in commercial transactions in the European Union. In the first part of this paper, an overview of the legal institutes, which regulate the area of late payments at the EU level, will be given. In the second part, the payment behaviour across the EU Member States will be analyzed by presenting data from payment reports of 2005, 2014, and Moreover, data on payment duration and payment delays of geographically different EU Member States (Germany, Hungary, France, and Italy) will be presented. The latter is carried out in order to compare the payment behaviour in three different periods and stakeholders (Consumer to Business, Business to Business, or Business to Public Sector). The final goal of this study on the one hand is to arrive at a conclusion of whether current legal provisions, in combating late payments in the EU, are providing the expected results and on the other hand to locate the main problems in this area and suggest further actions. Keywords: Late payments, European Union, Companies, Directives, Legislation Introduction Commercial relationships between companies in one country are regulated by the country s national legislation. The country s company law creates a framework whereby companies are allowed to freely regulate their interactions. However, it is done by contracts, statutes, or other agreements. Certainly, commercial transaction is the element that trade cannot do without. It consists of two or more parties, which cooperate with each other through exchanging goods or providing services. The main interest of the party that delivers the goods or provides the services the creditor is the payment of a certain good or service which has been delivered or provided. On the other hand, they the debtor are interested in the proper delivery of the goods or services. Furthermore, the goods and services are mostly supplied in the market by economic operators to customers, other economic operators, or to public authorities on a deferred payment basis. During this process, the supplier mainly gives its client time to pay the invoice, as agreed between parties, as set out in the supplier s invoice, or as laid down by the law. However, it has been determined that many payments in commercial transactions between economic operators or between economic operators and public authorities are made much later than

2 Late Payments in Commercial Transactions in the European Union: Are we Getting Better? 437 agreed on in the contract or laid down in the general commercial conditions between the parties. Although the goods or services have been delivered or performed, many corresponding invoices are well paid after the payment term 1. Consequently, this kind of situation cannot result in anything but inconveniences on the part of the creditor. It certainly affects its liquidity and the ability to create stable financial strategy for the firm, as well as dismissing employees or at least not hiring new ones. Usually, due to late payments, external finances, such as loans, need to be provided. In 1995, the European Commission tried to regulate this area with a recommendation on payment periods in commercial transactions. This was the situation from which the first EU directive on combating late payments stemmed 2. Furthermore, these EU legal provisions, at that time, were intended not only to combat late payments in Member States, but also to alleviate the problem in cross border transactions. Thus, this will adequately regulate this area and guarantee minimal rights to the creditor. Moreover, the differences between payment rules in Member States were considered as an obstacle to proper functioning of the internal EU market 3. Later on, the European Commission found that late payments in commercial transactions have continued to be a general problem in the European Union, in part, due to the deficiencies of Directive 2000/35 4. Moreover, the commission s concerns were towards the failure of the directive s implementation in some Member States. This is especially based on the fact that during the period of economic crisis (2008), the negative consequences derived from late payments were far more harmful to the companies. Hence, this is due to the difficulty in accessing financing. All these resulted in the 2011/7 directive and the introduction of some changes in the recast, which will be mentioned in addition. The legal provisions that regulate late payments in commercial transactions are important legal institutes. Thus, it takes into consideration the reason from which these provisions ensue and the size of the problems they have to cope with. In this regard, it is of particular relevance to have an overview of the impact they had on payment behavior across the European Union and the developments of payment duration and payment delays between the EU entities. Sixteen years after the first directive and the changes that followed the 2011/7 one, it is now the right time for an analysis which will compare data from surveys and current literature on the topic. This analysis must be done with the aim of determining whether any improvements in the payment behavior across the EU have been accomplished. The hypothesis is that, when it comes to harmonization with the directive, the EU Member States have displayed success. However, the bad payment behavior is not significantly changed across the Member States for the time being. Literature Review Even though late payments in commercial transactions is a significant issue with serious implications on companies, especially the SMEs, there is limited literature that delves into the problem, presents the current situation at EU level, and offers appropriate recommendations. Bad debts and late payments have negative impact on socio-economic indicators and economic sustainability (Grigonyte, 2016). Chronologically, the EU directives were not the first effort employed for combating late payments. Penalties for payment delay, where the debtor has to pay the creditor due to his late 1 Directive 2011/7/Eu of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (recast), Official Journal of European Union, L 48/1. A 2 and 3. 2 Directive 2000/35/Eu of the European Parliament and of the Council of 29 June 2000 on combating late payment in commercial transactions, Official Journal of European Union, L 200/35. 3 Ibid, Article 9. 4 Commission Proposal for a Directive of the European Parliament and of the Council on Combating Late Payment in Commercial Transactions (Recast) - Implementing the Small Business Act, at 4, COM (2009) 126 final (Apr. 8, 2009).

3 438 Jovan Shopovski payment, are well-known across European legislations. Its main aim is to discourage late payments in commercial transactions through penalization. Moreover, the United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980) is an act where many of the EU directives legal provisions on late payments can be found. It is considered a successful multi-lateral treaty designed to unify rules traditionally addressed only in domestic legal systems (Bell, 1996). The rules in this convention are stricter and potentially more successful than the ones in the EU directives (Bilotta, 2015). However, the EU directives (2000/35 and 2011/7) are direct regulations for combating late payments in the European Union. Thus, these payments are obligatory to all Member States. Undoubtedly, they have helped in combating the bad payment behavior of companies and its negative economic impact (Conell, 2014). Even though the 2011/7 directive brought the issue of late payments to the forefront of the political agenda in Europe, there are many challenges ahead. Moreover, there is not yet evidence on the effectiveness of the directive in terms of reducing uncertainty in cross-border transactions (Hausemer et al., 2015). With no intention of comparison between the EU directives with similar regulations that affect the subject, nor between both EU directives, an overview of the current legal provisions and survey analysis will follow in addition. Combating Late Payments in the European Union As mentioned before, more often than not, late payments in the European Union not only affect the liquidity of the companies. However, it also has influence on employment such that new employees are not hired or current ones are dismissed. The consequences of these payments, made after the contractual or statutory payment period, can be really severe to the EU economy. Late payments cause approximately one out of four bankruptcies in the EU, leading to the loss of nearly 450,000 jobs every year 5. The legal acts, which were created to combat late payments in commercial transactions and established with the directives, were mainly implemented by the Member States 6. The European Union tries to regulate this area with directives that will combat late payments through harmonization of the national legislations. Since it is a habit for the buyer to make the payment after the receipt of an invoice for delivered goods or services, provisions on payment terms must be part of the legislation. Moreover, the directive regulates the payment relationships between parties, such as Government to Business, Business to Business, or Business to consumers. Subsequently, the intention is to combat payments in unreasonably long periods by setting payment terms, in which the buyer, after receiving certain good or service, has to pay to the creditor. Moreover, in these cases, one of the parties (the creditor) has fulfilled his responsibility by delivering the agreed goods or services on time. In spite of that, the debtor will not make the payment during the agreed period or in the legally determined reasonable payment terms, after which sanctions for late payment will logically follow. One of the aims that the directive strives to achieve, along with the protection of the creditor from unfair behavior, is protection of cross border activities between undertakings. Hence, this is done through harmonization of the rules that regulate the internal market in different Members States. A payment will be treated late if the creditor does not have the amount at his disposal, even though he already fulfilled his contractual or legal obligations. When it comes to the moment of liability for a late payment, the reception of the invoice or the reception of the goods and services plays 5 Opinion of the European Economic and Social Committee on the proposal for a Directive of the European Parliament and the Council on combating late payment in commercial transactions (recast) Implementing the Small Business Act, Official Journal of the European Union, C 255, 2010, p Since the transposition deadline of the Directive, the Commission launched 13 infringement actions against some Member States. (Hausemer et al., 2015, p.33)

4 Late Payments in Commercial Transactions in the European Union: Are we Getting Better? 439 a key role. Additionally, it is important to establish a system in which the moment the debtor receives the invoice can be clearly determined. The latter in regard of e-invoicing entails the process where the receipt of invoices could generate electronic evidence. However, this is partly governed by the provisions on invoicing contained in Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 7. The main instruments for combating late payments introduced by the provisions are deadlines or payment terms in which the creditor should pay the debt. In case of payment after this period, the creditor has a right on interest rate. Moreover, the debtor is required to pay compensation of the recovery costs to the creditor in case of payments after the deadline. Therefore, the aim of these instruments is to prevent late payments, as well as to penalize the debtor who will not pay the debt within the given timeframe. 1.1 Payment Terms In the 2011/7/EU directive, the Legislator (EU) differentiated between transactions between undertakings and transactions where, on the side of the debtor, is a public entity/authority. It is supported based on the fact that public authorities have conformity from more secure, predictable, and continuous revenues than undertakings. Moreover, it is easier for public authorities to get funding. Unlike the undertakings, they depend less on building stable commercial relationships 8. Furthermore, the payment terms were set in the directive. National legislations should make business-to-business contractual payment periods to be limited. As a general rule, the contractual term agreed by the parties should be up to 60 calendar days. When there is no fixed term in the contract, the creditor has a right on interest rate after 30 calendar days following the date of receipt by the debtor of the invoice or an equivalent request for payment. Furthermore, the receipt of the invoice is uncertain, 30 days after the date of receipt of goods or services. The latter is observed, even in the case of an invoice being issued before the receipt of goods or services. Calculation of payment terms is found to be a kind of dilemma for the stakeholders. In some Member States or sectors, the calculation starts after issuing the invoice, whereas in others after the receipt of goods (Hausemer et al., 2015). Maybe the most suitable option is to add clarity to this issue through a guidance published by the Commission on the ways of interpreting this institute. It should be outlined that the contract between the parties is the bottom line of their relationship. When the payment term is not regulated in the contract, the calculation (30 days) starts after the issue of the invoice. Moreover, only if an invoice is issued before the receipt of goods or services can the latter be a threshold for calculation. However, only in exceptional cases can this period be extended. Mutual agreement between the parties is one of the conditions as well as the extension, which is not grossly unfair for the creditor. It means that the payment period is not an absolute one and could be prolonged by the parties. In order to avoid confusion with using subtle vocabulary such as grossly unfair, the legislation defines which situations will be considered to be grossly unfair for the creditor. In this regard, laws or agreements between the parties that allow exclusion of the right to interest rate for late payment or compensation of the recovery costs will be presumed to be grossly unfair. Moreover, gross deviation from good commercial practice, contrary to good faith and fair dealings, must not be part of the parties contract or practice. In summary, the parties are free to extend the payment period beyond 60 days under mutual agreements only if it is not grossly unfair for the creditor, i.e. provisions regarding exclusion of the interest rate, recovery costs compensation, or if it is not against good commercial practices or good faith. In order to avoid uncertainty and different interpretations, the legislator should clarify the term grossly unfair (Hausemer P. et al., 2015). 7 Ibid, article 18 8 Ibid, p.3 paragraph 23

5 440 Jovan Shopovski Contrary to this, when it comes to transactions between undertakings and public authorities (public authority is a debtor), stricter and ultimate payment periods have been introduced. However, the directive obliges Member States to ensure that the payment period does not exceed 30 days following the receipt of the invoice, date of receipt of goods and services, or following the date of the conformity verification of the goods and services 9. In addition, the acceptance or verification period (when agreed by the parties or imposed by the law) must not exceed 30 calendar days from the date of receipt of the goods or services. Thus, this is not applicable unless otherwise expressly agreed upon in the contract and in any tender documents, provided it is not grossly unfair to the creditor. Again, an opportunity for infinite extension of the verification period allows extension of the payment term. Furthermore, the payment term of 30 days may be extended by a Member State up to a maximum of 60 calendar days but only in particular situations. The latter mainly refers to the public authorities that provide health care services 10. However, when a Member State decides to extend these deadlines, it must send a report to the European Commission. Thus, the Commission shall submit the proposal to the EU Parliament and the Council. The latter intends to control every particular case of deadline extension for public authorities in Member States. 1.2 Interest Rate and Compensation of Recovery Costs In transactions between undertakings or when a debtor is a public entity, the creditor is entitled to interest rate for the debtor s late payment. Thus, according to the directive, the interest rate shall be guaranteed by the national legislation only if: a) The creditor has fulfilled its contractual and legal obligations; and b) The creditor has not received the amount due on time, unless the debtor is not responsible for the delay. Therefore, the aim of the provisions is to secure at least an optimal interest rate, which will be applied by Member States. It is also aimed at prohibiting every possibility for contractual exclusion of the right to interest rate. The minimal interest rate should be equal to the reference rate plus at least 8 percentage points. The reference rate is the interest rate applied by the European Central Bank to its most recent main refinancing operations for countries in the Euro zone and the equivalent rate set by countries national central banks for the countries outside the Euro zone 11. To sum up, according to the current provisions, the creditor is entitled to the right of an interest rate, in case of debtor s late payment. Therefore, it is up to the creditor s willingness to exercise the right on interest rate in case of late payment. However, exercising the right of an interest rate is not a well-known practice among the EU companies, especially the SMEs. For fear of damaging good business relationships, the debtor s powerful position on the market or inefficient juridical procedures are the main reasons for this situation. An automatic interest on late payments could positively influence changing the practices (Hausemer et al., 2015). In order to have a clear account of which amount the creditor is entitled to, the interest rate per annum will be presented in addition. Table 1: Late Payment Interest rate From 16 March (when the late payment directive came into force) European Central Bank main refinancing rate Late Payment Interest Rate (ECB rate + margin 8%) March July Ibid, page 6, article Directive 2011/7/Eu Of The European Parliament And Of The Council of 16 February 2011 on combating late payment in commercial transactions (recast), article 4, Official Journal Of the European Union. 11 Ibid, page 5, article 2.

6 Late Payments in Commercial Transactions in the European Union: Are we Getting Better? January July January July January Source: Another instrument used to combat late payments is a fixed sum guaranteed to the creditor in case of late payment. The directive obliges Members States to ensure such provisions in their national legislations. This is possible by guaranteeing the creditor a fixed sum of at least 40 EUR as compensation for the recovery costs. This amount is payable without the necessity of a reminder. In addition to this fixed sum, the creditor has the right to be compensated for his costs by the debtor on a reasonable amount. Thus, the latter means that costs such as the instruction of a lawyer or employing a debt collection agency will be compensated to the creditor 12. Fair recovery of the costs is supposed to discourage late payment behavior. The directive does not prevent Member States from determining higher amounts for recovery costs. It only sets the minimal amount that the national law cannot go below. Moreover, the main intention of the legislation is to position the compensation of recovery costs as an institute, which cannot be excluded contractually by the parties. In this regard, every contractual term or practice, which excludes compensation for recovery costs, shall be presumed to be grossly unfair to the creditor. The EU Member States should determine that this kind of provision is unenforceable or that it gives rise to a claim for damages. However, regardless of the good intentions, the general opinion is that the amount of the recovery cost is positioned too low. It does not stimulate the creditors to claim his rights and change the payment behavior in the long term (Hausemer et al., 2015). 2. Late Payment Behaviour in the European Union As previously mentioned, especially in the past 20 years, late payments have been addressed as a very serious issue for the national economies as well as for the joint EU market. According to the data gathered directly from the companies officials, as at the end of 2005, the value of overdue accounts receivable (money owed to a company by its debtors) was 250 billion euros 13. Furthermore, in 2014 and 2015, the situation was not encouraging at all. The European payment report has also revealed that respondents of the survey see 3.1 percent of their yearly revenues being written off. As a result, this places many European companies at a strain. When converted to actual money, this indicates that as much as 289 billion euros was lost annually 14. In addition, the data that will be presented stemmed from the various responses of the companies officials throughout the European Union. These are not data such as court verdicts or data from official EU or national registers. Nevertheless, up to an extent, they can depict the image of late payments in the European Union. Moreover, the number of companies involved in the survey and its direct approach gave them reliability 15. Evidently, the aim of this survey is to present the payment terms and payment delays after the terms agreed between the parties, not taking into consideration the payment terms established by the law. Moreover, different research methodologies have been used for the 2015 payment report. Therefore, no comparison is feasible. However, the results of the 2015 report will be presented in addition only to highlight the importance of the methodology used and the necessity of searching for the most adequate measurement technique Ibid, page 7, article European Payment Index, Intrum Justitia, 2005, available at 14 European Payment Report, Intrum Justitia, 2015, available at 15 For instance the data for the European Payment Report in 2015 derived from respondents. 16 The author does not argue with the results given in the European Payment Index (2015), but underlines the potential influence of different research methodology on the final result.

7 442 Jovan Shopovski In 2005, regardless of the payment relationship (Business to customer, business to business, or business to public sector) ), payment delays existed in all the EU Member States covered by the survey. Below is a figure wheree the payment term in days is presented and compared to actual payment duration. A payment delay could be recognized in the figure. The figure lacks differentiation between business to business or business to public sector payment terms and delays. Therefore, it only presents the average payment duration regardless of public or private entities. Figure 1: Late payment in the EU in 2005 Source: European Payment Index (Intrum Justitia, 2005) Moreover, the 2014 survey on late payments, where same methods have been used, shows that even though slight improvements in payment duration are visible, late payments in all the countries are registered. Below is a list of countries payment duration in 2014.

8 Late Payments in Commercial Transactions in the European Union: Are we Getting Better? 443 Figure 2: Late payments in Europe in 2014 Source: European Payment Index (Intrum Iustitia, 2014) In addition, the 2015 report on late payments has been conducted using different methodologies. The aim is not to make a comparison, but to show how different the resultss could be when different methodologies are used. Figure 3: Late Payments in Europe in 2015

9 444 Jovan Shopovski Source: European Payment Report (Intrum Justitia, 2015) 2015 Again, significant differences between business to business and business to public sector payment terms are still visible17. In 2015, as well as in 2014 and 2005, public entities are the ones who delay their payments the most. However, the situation with the payment delays in some countries has totally changed only in a period of one year when compared to surveys based on different research methodologies. The figure shows that the debtors in Germany, Lithuania, and Latvia on average in 2015 pay in the contractually contractually agreed timeframe, which is opposite to the results for the same countries in 2014 and In these countries, the payment duration does not exceed the payment term, i.e. there is no payment delay (European Payment Index 2015). The latter could also be a consequence of longer contractual terms between the parties in these countries and should undergo further analysis. 17 It is visible from 2005 country-by-country country country analysis where different different payment sectors are taken into consideration.

10 Late Payments in Commercial Transactions in the European Union: Are we Getting Better? 445 This certainly should raise a debate on the influence of the methodology on the results and necessity for finding the most suitable measurement on late payments across the EU (Hausemer et al., 2015). To obtain an image on the trends of late payments in business to business and business to public sector relationships in 2005, 2014 and 2015, and to overcome the lack of the figures above, the situation on payment terms and delays of geographically different Member States will be compared. Thus, payment delay or payment duration in France, Germany, Hungary, and Italy will be presented. 2.1 Payment Delays in France Table 2: Payment delays in France Overview of Payment Delay Private Customers (B2C) 10 days 16 days 11 days Business Customers (B2B) 13 days 14 days 15.2 days Public authorities 19 days 19 days 19.3 days Source: European Payment Index (Intrum Justitia, 2005, 2014 and 2015) It could be concluded that the situation in France from 2005 to 2015 remains closely similar. Most especially, the delays of the public sector remain the same. However, it takes 19 days more than the contractually agreed timeframe for the public authorities in France to pay their debts. 2.2 Payment Delays in Germany Table 3: Payment delays in Germany Overview of Payment Delay Private Customers (B2C) -1 days 9 days 12.2 days Business Customers (B2B) -1 days 9 days 14.9 days Public authorities 0 days 10 days 29.9 days Source: European Payment Index (Intrum Justitia, 2005) According to the data gathered from German companies in 2005, the entities in Germany have a practice to delay payment of their debts for a certain period of time. In 2014, improvements in this area are evident, especially when it comes to the payments of public authorities. Significant progress in the actual payment duration in 2015 is visible. The latter in regard that companies pay the debts before the contractually established terms. Finally, on average, in Germany in 2015, there are no payments after the payment terms. Certainly, this is a very welcome situation for German creditors, but the different methodologies of the survey should not be forgotten. Therefore, it makes the results of the comparison with the previous years irrelevant. 2.3 Payment Duration in Hungary Table 4: Payment Duration in Hungary Overview of Payment Delay Private Customers (B2C) 20 days 28 days 39.2 days Business Customers (B2B) 28 days 41 days 43.7 days Public Authorities 42 days 54 days 46.2 days Source: European Payment Index (Intrum Justitia, 2005, 2014, and 2015) If we compare the payment duration in 2005 and 2014, the Hungarian entities in the private sector have significantly improved their payment behaviour. Thus, there are improvements in the payment duration when it comes to business to consumers or business to business relationships.

11 446 Jovan Shopovski However, this is not a case when the debtor is a public entity. The situation is even worse since the public authorities increased their payment terms. 2.4 Payment Duration in Italy Table 5: Payment duration in Italy Overview of Payment Delay Private Customers (B2C) 48 days 75 days 56.3 days Business Customers (B2B) 80 days 94 days 95.7 days Public Authorities 144 days 165 days days Source: European Payment Index (Intrum Justitia, 2005, 2014, and 2015) The number of days needed for public entities to pay their debt in Italy has been significantly increased in It also shows that the payment duration in days of Italian public authorities is incredibly long compared to the other countries, even compared to the private sector. Consumers payment duration has also been aggravated whilst the business to business payment leveled off. Conclusion Even though the new directive on late payments did not introduce any new instruments, except for the fixed sum for recovery cost, it puts pressure on the EU Member States to make national legislations to comply with the directive s provision. It is obligatory to all Member States, which from March 2013, implemented the provisions in their national legislations. Data from some of the largest surveys on late payments in Europe have been used. It turns out that the major problem lies in the payment behaviour of public authorities. In spite of the concise statement in the new directive, that exactly the public sector has to have shorter payment terms, reality shows the opposite. Certainly, some other actions will have to be implemented in this area. It could be a fertile ground for applying the automatic interest for late payment. It will mean that when a public authority is a debtor, in case of late payment, the interest will be obligatory and will not depend on the creditor s willingness. It will certainly put higher pressure on public authorities and possibly improve their payment behavior, even in a short term. Furthermore, there are countries such as Germany and the Baltic countries, which have improved the payment behaviour of their entities regardless of whether they are private or public. The best practices of how these countries regulated their market in the area of late payments need to be shared and adequately implemented in other legislations. It is certainly an area for further research. In spite of gathering large amount of data, the surveys used in this paper have presented data based on the responses of some companies officials. Moreover, the latest survey (2015), which used different methodology rather than previous ones, reveals significant improvements in the late payment behavior in some EU Member States in the relatively short period of 1 year. Hence, in order to obtain a clear image of the late payment behavior in the EU, the main focus has to be on establishing effective measurement methods. Finally, data on late payments based on companies statutory books could be a great help. Here, precise company transactions and payment terms will be taken into consideration and the conclusion will not rely on partial information. References [1] Cara Bilotta (2015). Ending the Commercial Siesta: The Shortcomings of European Union Directive 2011/7 on Combating Late Payments in Commercial Transactions, 38 Brook. J. Int'l L.

12 Late Payments in Commercial Transactions in the European Union: Are we Getting Better? 447 [2] Commission Proposal for a Directive of the European Parliament and of the Council on Combating Late Payment in Commercial Transactions (Recast) - Implementing the Small Business Act, at 4, COM (2009) 126 final (Apr. 8, 2009). [3] Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (recast), Official Journal of European Union, L 48/1. [4] Directive 2000/35/EU of the European Parliament and of the Council of 29 June 2000 on combating late payment in commercial transactions, Official Journal of European Union, L 200/35. [5] European Payment Report (2015), Intrum Iustitia. [6] European Payment Index (2005), Intrum Iustitia. [7] European Payment Index (2014), Intrum Iustitia. [8] Hausemer, P., Rzepecka, J., Lofstrom, F., Eparvier, P., Rivoire, L., Gallo C., and Maroulis, N (2015). Ex-Post Evaluation Of Late Payment Directive, European Commission. [9] Ingrida Grigonyte (2016). Bad Debt Influence On The Sustainability Of Economy Of The Country. European Scientific Jurnal, ESJ vol.12, no.16 p ISSN (online), ISSN Doi: /esj.2016.v12n16p79 [10] Kevin Bell (1996). The Sphere of Application of the Vienna Convention on Contracts for the International Sale of Goods, 8 Pace Int'l L. Rev [11] William Conell (2014). Economic Impact of Late Payments, European Commission, Economic Papers 531, ISSN (online), ISSN (print) [12] Interest-Rate-/ [13] Opinion of the European Economic and Social Committee on the proposal for a Directive of the European Parliament and the Council on combating late payment in commercial transactions (recast) Implementing the Small Business Act, Official Journal of the European Union.