WRITTEN QUESTION E-3101/96 by Graham Mather (PPE) to the Commission (18 November 1996)

Subject: Late payment policy of the Commission

The current payment policy of the Commission requires that the Commission honour all invoices within 60 days. However, there have been many cases where the Commission has not paid the invoice within the 60-day limit. I have been informed of one specific case in which the Commission not only did not pay the invoice within the 60-day period, but neglected to inform the company in question as to why their invoices had not been paid.

Many of the companies that secure Commission contracts need a stable and guaranteed payment stream in order to provide their service.

Could the Commission tell of any plans to reform the current payment policy? Could the Commission also comment whether it plans to establish a redress policy for late payment along the lines of its own Commission recommendation of 12 May 1995 (95/198/EC) ((OJ L 127 of 10.6.1995, p. 19. )). This Recommendation and the subsequent Parliament opinion recognize the creditor's right to interest on arrears and other compensation for damage incurred by late payment.

Answer given by Mr Liikanen on behalf of the Commission (15 January 1997)

The Commission agrees with the Honourable Member that all companies with which it has contracts are entitled to expect rapid and dependable payment of the amounts due to them. The Commission endeavours to ensure that payments are made within 60 days of the date of receipt of the invoice, which must be drawn up in the proper form and presented in accordance with the contractual clauses agreed between the parties.

The Commission would ask the Honourable Member to name the specific case in which he claims payment was not made within 60 days.

Special attention is paid to the authorization and payment procedures followed by the Commission. Recently several changes have been made which have considerably reduced the time involved. The authorizing departments enter in Sincom the date of receipt of each invoice so that the corresponding payment deadline can be accurately calculated.

To make payments, the Commission now uses the Swift network, whilst the authorization, approval and validation of the accounts (the three stages in the procedure required by the rules) have been largely automated: the papers still used as supporting documents no longer require a handwritten signature as only the electronic validation in Sincom is authentic.

In order to facilitate and speed up the authorization of payments, the Commission has also introduced a special 'third-party file' containing the business and banking details of all recipients of payments. Systematic use of this file not only speeds up the authorization procedure (it is no longer necessary to input repeatedly all the details of each payment since the use of a simple code is enough to identify the recipient) but also ensures rapid and reliable payment through banking channels.

The Commission regularly calculates the time taken to make payments. Thus, in 1995, it was found that the average time needed for budgetary payments by the Commission, calculated from the time of receipt of the invoice to the date on which the Commission's account was debited, was 37 days, which may be broken down as follows: clearance by the authorizing officer (26 days), approval by the Financial Controller (6 days), validation and first signature (3 days), followed by second signature and dispatch to the bank (2 days). In the same year, 84% of payments were made in 60 days or less, whilst 9% took between 60 and 90 days and 7% over 90 days.

The Commission feels that these figures could still be improved on. With the help of Sincom, it proposes to monitor all payment deadlines so that at least 95% of payments are made within 60 calendar days of the request for payment first being recorded.

Rather than having to pay interest on late payments (for which, moreover, appropriations would not always be available) the Commission is endeavouring to make all its payments within deadlines acceptable to its contractual partners.