Swedish business minister uses launch of European Payment Report to set September deadline for agreement on voluntary code
Sweden’s Minister for Enterprise and Innovation has called on the nation’s business community to address the issue of late payments by the autumn, or face the prospect of legislation.
Mikael Damberg was speaking at a seminar marking the launch of the European Payment Report 2017, a comprehensive survey of European companies carried out by leading credit management services group Intrum Justitia.
“A system failure”
An audience of business leaders and media heard Damberg set a deadline of 1 September for the Swedish business community to reach agreement on a voluntary code to deal with the issue, which he described as “a system failure”. And the business minister did not rule out the possibility of introducing a new law to enforce proper payment terms if a freewill solution was not forthcoming. “We need to find a way for the Swedish economy to win,” he said.
The main findings of the European Payment Report, which surveyed 932 companies in Sweden and over 10,000 businesses in Europe, were presented by Intrum Justitia’s CEO and President Mikael Ericson. The report found that in Sweden 65% of small and medium-size enterprises (SMEs) feel pressured to accept late payments, and the trend has worsened by 12% since last year. SMEs say that late payments stop them from growing and Intrum Justitia estimates that up to 67,000 new jobs could be created in Sweden if companies were paid on time.
Fighting to survive
Mikael Damberg was joined in a panel discussion by Mikael Ericson and three leaders of Swedish small and medium-sized enterprise (SME) organisations: Gunther Mårder, CEO of Företagarna (the Swedish Federation of Business Owners), Sanna Arnfjorden Wadström, the CEO of data company Intab, and Fredrik Sidahl, the CEO of the trade association for Scandinavian suppliers to the automotive industry Komponentsgruppen.
In a frank debate, each of the SME representatives on the panel explained in stark terms just how the issue of late payments is affecting the growth, or, in some cases, even the very existence of their members’ businesses.
“We must fight to survive,” said Sidahl, while Arnfjorden Wadström, the CEO of data company Intab and a board member of the Swedish Industry Association, spoke of late payments essentially being “lending” by SMEs to bigger businesses. “This stops SMEs from developing through hiring and training staff,” she said.
Günther Mårder added, “Growth drives capital, and our companies can’t develop because the risk has been put on them by those who pay them late.”
Voluntary code or legal requirement?
However, the panel was divided on whether a voluntary approach or binding legislation was the best solution.
Mårder and Sidahl believe that a voluntary approach would work better.
“Legislation is very hard to make, as every sector of industry has its unique way of doing business, and I understand there are a lot of sectors in need of longer payment times. With a code of conduct for payments it would be easier to cover those specific sectors than it would be in legislation. Hopefully we will not have to have legislation on this issue,” said Mårder.
For Sidahl, “Legislation would be too easy to work around. Companies could buy their parts from Denmark instead, for example – it’s easily done. Instead, I think a voluntary approach is more effective to raise the issue. We could use a ‘name and shame’ list, and get the bigger companies to tell us why they can’t pay us within 30 days. I think that would have a greater effect.”
However, Arnfjorden Wadström, who is also a board member of the Swedish Industry Association, feels that a new law is the only answer.
“A law would provide some weight to the solution. If we decide on a code it has to in some way be based on a law when it comes to punitive measures, which is the case in for example France where an offending company can be excluded from public tenders.
“But I still believe in a regulation, a regulation that makes it costly for big companies to not pay on time. Then we will see a change in behaviour.”
Praise for Intrum Justitia
All did agree that momentum towards a solution is building, and they welcomed the part Intrum Justitia has been playing in the debate.
“The European Payment Report is great because it provides us with statistics. That’s hard facts,” said Sidahl. “And it’s also good that the question is raised throughout Europe, so you can compare different states, and we see now that in Sweden are lagging behind.”
“It’s a great initiative and we are very happy to work together with Intrum Justitia on this issue,” said Mårder, who was also one of the signatories to Intrum’s ‘30 Days Club’.
“It feels good that a big company is pushing this matter,” added Arnfjorden Wadström.
Driving the debate
From Intrum Justitia’s perspective, Mikael Ericson was pleased with how the event went. He also reaffirmed the company’s commitment to highlighting the issue.
“The purpose of the European Payment Report is to contribute to what is an important discussion in Europe about payment structures and late payments in general, so I think this was a great event and we managed to get the Swedish Minister for Business Affairs here, which of course increased the profile.
“For us it’s a question of a sustainable society and I think addressing late payments is one of the pillars of that. It should be a normal requirement for every small and medium-sized enterprise in Europe to have a decent expectation of being paid on time. It’s an important question for us, and we will continue to drive it and be part of the discussion.”