On 14 January, the European Commission’s EU Payment Observatory published its Annual Report 2024, a comprehensive analysis of the main trends and developments in payment performance related to commercial transactions in 2023. While the report’s main findings were presented during an online session in December, a webinar session of the Observatory will present the full Annual Report 2024 on 5 February 2025.
Main findings of the report
According to the report, in 2023 the share of enterprises having problems because of late payments in the EU experienced its highest increase in the past five years, from 43% to 47%. This means a return to 2019 levels, reversing the progress made during the pandemic years. In 12 Member States, more than half of companies reported having issues because of late payments. Average payment periods seem to have deteriorated more on Business to Business (B2B) than on Government to Business (G2B) transactions.
The report notes that in 2023 larger companies remain less likely to pay on time in most Member States (15 out of 20) in B2B, while in 13 out of 20 countries, micro companies pay more often by the due date. Even though most Member States saw improvements in on-time payments for SMEs, the picture is more nuanced with micro companies, 10 countries seeing an increase in timely payments, while there were decreases in another 10. Across all sectors included in the survey, companies reported an increase in average payment periods.
The report’s findings also indicate that late payments have a significant impact on firms’ investment decisions, negatively affecting their competitiveness. Late payments considerably hinder firms’ ability to access financial services and, conversely, difficulties in accessing finance that result in even more late payments. 59% of all companies surveyed indicate that being paid late posed a significant challenge in terms of their ability to invest in expanding their product and service offerings, while 56% said it negatively affected efforts to improve their sustainability performance. Finally, 43% reported that it hinders their ability to invest in a digital strategy, thus directly impacting the digital and green transitions.
Among the report’s conclusions, the need for a solid and clear legal framework regulation for payment terms appears crucial. Measures that can have positive effects are also mentioned. For instance, in Spain, an effective sanctioning regime with high penalties and an anonymous complaint box for late payment have led to improvements in payment times and have further encouraged a culture of prompt payment.
The construction sector
In particular when it comes to the construction sector, the report notes it as a case in point. Although findings vary greatly from one country to the other, construction performs poorly in the majority of Member States, with Sweden, Denmark, Spain and Czechia being the worst performers. The report notes that this variability might be explained by the long supply chain and local specificities that characterises construction projects, which makes it particularly vulnerable to the ‘domino effect’ in which late payments cause more late payments. That way, if the culture does not favour prompt payments, it is more likely to fall into a late payments’ vicious circle, making it more prone to have a low share of on-time payments.
EBC reiterates its position for a need to effectively combat late payment. It starts by prioritising the need for a robust EU-wide legislative framework to offer all actors, notably SMEs in the construction value chain, the security and fair conditions they need to stay in business and implement Europe’s sustainable transition goals. This Annual Report 2024 shows again the necessity for stricter rules applying to all, and an improved enforcement framework with clear roles for the authorities in charge. In this sense, EBC encourages competent national ministers to resume the works at Council level on the Late Payment Regulation proposal, to find constructive approaches and deliver on solutions for micro companies and SMEs in the construction sector.
![]() | To access the Annual Report Summary, click here To read the full Annual Report 2024, click here To read the latest EBC article encouraging Council to continue its work on the Late Payment proposal, click here To consult the EBC position paper on the Revision of the Late payment directive, click here |