Article by the European Builders Confederation (EBC)

Last December, the EU Payment Observatory of the European Commission published its Annual Report for 2025, which confirms that late payments remain a critical challenge for SMEs across the European Union. In 2024, more than half of EU companies reported suffering difficulties caused by late payments from either public authorities or private sector clients. This represents a 5% increase compared to 2023 and 10% higher than in 2021. This trend is particularly damaging for SMEs, which are more vulnerable to cash-flow disruptions and administrative burdens.

The report shows that average payment periods continue to exceed 60 days in both business-to-business (B2B) and government-to-business (G2B) transactions. Public authorities consistently pay later than private companies in every Member State, with governments averaging close to 70 days. As in previous years, larger companies are significantly less likely to pay on time, reinforcing power imbalances along supply chains, an issue of particular relevance for the construction sector.

A new section in this year’s report analyses payment terms, revealing a strong link between longer agreed terms and actual payment delays: in 87% of cases, longer payment terms correlate with longer payment periods. 64% of companies support the introduction of mandatory maximum payment deadlines in B2B transactions, reflecting growing concern about unfair commercial practices.

While sectoral differences exist, the report finds that national payment culture matters more than sector-specific factors, with significant variations between Member States. Amid economic uncertainty and slowdown, late payments are cited as one of the main structural drivers reducing competitiveness in 2024, alongside the broader business environment.

The consequences of poor payment behaviour are far-reaching. Companies most frequently point to negative impacts on investment and growth, as well as the substantial administrative time spent chasing overdue invoices, corresponding to nearly 10 hours per week on average.

The Annual Report of the EU Payment Observatory remains the EU’s key analytical reference on payment performance in commercial transactions. Its findings underline the urgent need for stronger enforcement and clearer rules to protect SMEs, improve cash flow, and support sustainable growth across Europe’s construction industry and beyond.

EBC once again notes the pressing need to address the challenges posed by late payment, which are particularly damaging for construction SMEs and craft trades. Robust enforcement of the current framework, based on the ruling of the EU Court of Justice, as well as reinforced EU rules based on the legislative proposal made by the Commission and the European Parliament’s relevant report would offer hope to SMEs for a fairer payment practice in the years to come.

You can click the following links to access: the Summary of findings, the Factsheets and the full EU Payment Observatory Annual Report for 2025