The Spanish Federation of Footwear Companies (FICE) believes that proposed revisions to the EU’s directive on late payments will only make matter worse for Spain’s footwear companies, which since 2022 have been dealing with a Spanish law called “Create and Grow” (Ley Crea y Crece).
This law has limited eligibility for public subsidies of €30,000 or more to companies that pay within 30 days (or 60 if the creditor agrees) for the goods or services they procure. However good its intent, FICE argues, the law has put footwear SMEs at a disadvantage, because the competition to Spain’s footwear companies labor under no such constraints, and Spain’s footwear industry derives much of its revenue from exports.
Medium-sized companies are in danger
Any such law should in FICE’s view take into account the peculiarities of a given industry. For footwear, the preparation of collections, procurement of materials, manufacturing, warehousing, dispatching and billing periods can exceed eight or nine months. As Fice Secretary Marián Cano points out, Spain’s footwear companies are already suffering from declining demand and rising labor costs. Medium-sized companies in particular lack the liquidity as well as the financial and administrative infrastructure to make quick payments, resulting in them being cut off from subsidies. According to FICE, this effect is boosting the larger players in the industry.
FICE expresses satisfaction with the EU’s recognition of late payments as a problem, advocating for consistent rules across its territory. However, FICE believes that the focus on payment windows alone is misplaced. The average payment delay, says Cano, “is at present above 80 days. The solution is not to reduce the delay to 30 days but to establish mechanisms to guarantee payment in the afforded time.”
What the directive means
The EU directive 2011/7/EU, adopted in February 2011, was intended to be integrated into the EU’s various codes of national law by March 2013 at the latest. In the main, the as yet incomplete revision calls for:
- public authorities to pay for the goods and services that they procure within 30 days or, exceptionally, 60 days
- enterprises to pay their invoices within 60 days in the absence of other, fair express agreement
- automatic entitlement to interest for late payment and €40 minimum as compensation for recovery costs
- statutory interest of at least 8 percent above the European Central Bank’s reference rate
- EU countries to continue maintaining or bringing into force laws and regulations more favorable to the creditor than the directive’s provisions
