1. Presented by: Josef Busuttil Malta Association of Credit Management Implementing the Late Payment Directive in practice Informative Seminar Malta – 14 th February 2013

2. The EU Commission recognises that late payment: Affects the cash flow of businesses; Affects the cash flow of businesses; Hinders firms to invest in their business; Hinders firms to invest in their business; Limits competition; Limits competition; Affects the bottom line. Affects the bottom line. Josef Busuttil Malta Association of Credit Management

3. Payment Index (EPI 2012) by Intrum Justitia: Written off debt across Europe has risen by 4%; Written off debt across Europe has risen by 4%; €340 billion would have been saved; €340 billion would have been saved; 56 / 65 days - Average time from date of invoice; 56 / 65 days - Average time from date of invoice; 55% of businesses are suffering from 5 years of no growth, decline sales and ever rising write-off rates. 55% of businesses are suffering from 5 years of no growth, decline sales and ever rising write-off rates. Josef Busuttil Malta Association of Credit Management

4. Directives to combat late payment in B2B transactions Directive 2000/35/EC Directive 2000/35/EC Directive 2011/07/EU Directive 2011/07/EU - How effective? - How effective? - Are they achievable? - Are they achievable? - Why? - Why? Josef Busuttil Malta Association of Credit Management

5. The Directive 2011/07/EU May be confusing and intrusive; May be confusing and intrusive; May lack the support of other legislation / judicial systems; May lack the support of other legislation / judicial systems; May only cure the symptoms not the actual causes of late payment. May only cure the symptoms not the actual causes of late payment. Josef Busuttil Malta Association of Credit Management

6. Directive – confusing & intrusive! EU wide 30/60 day rule – but still allow to agree on longer terms; EU wide 30/60 day rule – but still allow to agree on longer terms; May conflict with good credit management practices – credit terms should be set according to the specific risk. May conflict with good credit management practices – credit terms should be set according to the specific risk. Josef Busuttil Malta Association of Credit Management

7. Directive – supportive legislation / systems Retention of Title Retention of Title Enforceable title within 90 days Enforceable title within 90 days - irrespective of the amount Josef Busuttil Malta Association of Credit Management

8. Directive – Curing the Causes of Late Payment!?!? What is Causing Late Payment? -Undercapitalisation; -Poorly managed firms; -Overtrading; -Price wars – intense competition; -Government mopping up liquidity; -Technical / trading disputes; -Others….. Josef Busuttil Malta Association of Credit Management

9. Suggestions to combat late payment - Education - Education - Credit Management Information Systems - Credit Management Information Systems - Adequately funded firms - Adequately funded firms - Efficient payments by governments - Efficient payments by governments Josef Busuttil Malta Association of Credit Management

10. Credit Management is all about being proactive Legislation is nice to have but adopting good credit management practice is key! Josef Busuttil Malta Association of Credit Management