Wednesday, September 16th, 2020
Letter to Commissioner Hahn about facilitating a €65 billion boost to small business cash flow resulting from all public payers paying their bills within 7 days
Commissioner Johannes Hahn
Member of the European Commission
Budget and Administration
16 March 2020
Dear Commissioner Hahn,
As you know, SMEs are the engine of Europe’s economy and in this difficult time, cash flow needs to be our top priority to help them resist the upcoming crisis. As they are less resilient than the bigger players, European SMEs are already reporting alarming cash flow situations following the outbreak of the COVID-19 pandemic. Measures taken across the continent, despite being necessary, are hurting small business and putting a halt to several sectors of the economy.
I am therefore making a call to all public bodies across Europe to respond to the cash squeeze caused by the COVID-19 crisis, to facilitate a €65 billion boost to small business cash flow resulting from all public payers paying their bills within 7 days, rather than the standard 30, while the effects on small business due to this crisis persist.
The ‘Pay in 7’ campaign, which includes a petition (access here) and a dedicated toolkit, is being launched by the ESBA Board (representing one million micro and small companies across the EU) to advocate this cash boost to business to be implemented by all public bodies, to accompany the European government’s plans for increased lending already announced.
The €65 billion figure has been arrived at by taking public procurement procedures as an example, and using the figures provided in the European Semester Thematic Factsheet on Public Procurement 2017:
Total of public procurement in the EU28 (including spending by utility companies) = 2.3 trillion EUR
SMEs win 45% of the aggregate contract value above EU thresholds — directly or as joint bidders or subcontractors
2.3 trillion EUR x 0.45 = 1.035 trillion EUR for SMEs per year.
1.035 trillion EUR ÷ 365 x 23 = 65.2 billion EUR of extra cash flow for SMEs
As part of the campaign launch I have released a statement to the media which contains this quote:
“The COVID-19 crisis will cause a cash crunch. Improved lending will help, but even better would be to pay small businesses what they are due, faster. Cutting payment terms back to just 7 days will put €65 billion extra into the balances of small businesses just when they need it most. Governments want to know how they can help. We think they should set an example, show their support for European SMEs, and ‘Pay in 7.”
Your support for the ‘Pay in 7’ campaign will be of extreme importance for European SMEs and we hope we can count you among our allies to promote the implementation of the 7 days change in payment terms while the crisis lasts.