German economy against fixed payment period of 30 days

Costs - German economy against fixed payment period of 30 days

The German economy is resisting the EU Commission's plan to set a payment deadline of 30 days for all commercial transactions. "The financing costs threaten to increase significantly, especially for small and medium-sized retailers," said Achim Dercks, Deputy Managing Director of the German Chamber of Industry and Commerce (DIHK), to Funke Mediengruppe (Thursday). Due to short payment terms, companies would then often have to interim finance the purchase of goods. "The resulting liquidity gaps often have to be covered by loans," he explained.

According to the current directive, the standard period for business transactions is 60 days. In general, however, payment periods can be agreed in a way that best suits all contractual partners.

EU wants to combat late payment with new regulation

The EU Commission is taking a different approach. With its new regulation, it wants to combat late payment and thus ensure that small and medium-sized enterprises do not get into financial difficulties. In times of crisis and turbulence, payment delays increase and represent a risk for many companies.

The Commission presented its plans, which also provide for a reduction in bureaucracy and simplified taxation, in mid-September. The proposals are still being negotiated with the EU member states and the EU Parliament. Federal Minister of Justice Marco Buschmann (FDP) told the Funke Mediengruppe that he was "very critical" of the changes planned by the Commission. "Rigid deadlines do not do justice to the different circumstances and leave the economy too little room for contractual freedom," he explained.

German Retail Association warns

The German Retail Association (HDE) warned that the new guidelines should not be adopted in this form. "Rigidly setting payment deadlines at 30 days will not prevent late payments and will therefore not help anyone," HDE Managing Director Stefan Genth told the German Press Agency. It is commonplace for washing machines, for example, to remain on the shelves for longer than 30 days. "That's why agreeing a longer payment period for goods that remain in stores or warehouses for longer is vital for retailers, as it saves them high financing costs." No new regulation is needed.

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1. The German Chamber of Industry and Commerce (DIHK), represented by Achim Dercks, expressed concerns about the EU Commission's proposal to enforce a 30-day payment deadline for commercial transactions, stating that it could significantly increase financing costs for small and medium-sized retailers.
2. Funke Mediengruppe reported that the German economy is resisting the EU Commission's plan, as the current directive allows for payment periods to be agreed upon based on the best interests of all contractual partners, with a standard period of 60 days for business transactions.
3. The EU Commission, on the other hand, is advocating for a new regulation to combat late payments, which it believes could help prevent financial difficulties for small and medium-sized enterprises.
4. Federal Minister of Justice Marco Buschmann (FDP) expressed his criticism of the EU Commission's plan, stating that rigid deadlines do not adequately consider different circumstances and leave the economy with insufficient contractual freedom.
5. The German Retail Association (HDE) warned against adopting the new guidelines in their current form, arguing that rigidly setting payment deadlines at 30 days will not prevent late payments and will not benefit anyone.
6. The IHK (Chamber of Commerce and Industry) in Berlin supports the German Retail Association's stance, calling for a more flexible approach to payment deadlines to accommodate the unique needs of different industries and businesses.
7. The proposed EU regulation, if adopted in its current form, could have significant implications for the German economy and the EU-wide business landscape, emphasizing the need for careful consideration and inclusive dialogue among stakeholders.

Source: www.stern.de