ECSO warns about late payments in the construction sector

19/06/2020

The European Construction Sector Observatory (ECSO) has launched an analytical report in order to better understand, through national case studies, some of the main causes of late payment, and how policies and instruments are tackling this issue.

The report, run on behalf of the European Commission, highlights that the construction sector seems to be suffering the most from late payment issues across the European Union (EU).

A relevant figure is that the construction sector records the longest payment durantion among the different EU economic sectors, up to 72-day duration in 2016.

In response to the problem, the EC adopted Directive 2011/7/EU on Late Payment, replacing the 2000/35/EC Directive.

This law has raised awareness of the problems of late payment, but it has not solved the issue because the current legislation does not oblige, nor set a defined methodology for the gathering of data on payment durations.

Country-specific analysis reveals that late payment practices remain widespread in business relationships in the construction sector.

The report indicates that the causes of late payment are the nature and characteristics of the construction industry, as well as the configuration of the supply chain in the sector, as they contribute to long and unfair payment terms.

In addition, public authorities in the construction sector tend to have longer-than-average payment terms.

The European Construction Sector Observatory aims to inform European policymakers and industry stakeholders on the market conditions and policy developments through regular analysis and comparative assessments.

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