How the European Commission can help SMEs get paid

Irish businesses are constantly hearing about the enormous export potential of the European Single Market and its 500 million citizens, so why is it that so many SMEs are reluctant to begin trading into Europe? The main barrier is risk, and primarily risk relating to getting paid late, or getting paid at all.

SMEs do not have the resources to engage in protracted debt collection or debt enforcement actions. There is also a perception that pursuing a debt internationally will necessarily involve lengthy international travel or complex appeals to legal authorities in the debtor’s jurisdiction. However, this is not necessarily the case.

The European Commission has implemented a number of procedures for cross-border claims enforcement aimed at making it as easy as possible for SMEs to bring proceedings against a debtor. Below are three options that might suit an SME considering legally pursuing cross-border debts:

·         The European Enforcement Order for Uncontested Claims

This process facilitates the recognition and enforcement of a national ruling on an uncontested claim in another Member State. A European Enforcement Order can be enforced by the authorities of another Member State without any further formalities.

·         The European Order for Payment Procedure

In this alternative to the procedure that can be carried out nationally, no national court order for payment is applied for, but rather a European payment order. The advantage of this procedure is that only one application is necessary. The order can also be enforced in other EU Member States. The precondition for making this application is that a cross-border legal matter is at issue.

·         The European Small Claims Procedure

The aim of this is to simplify the enforcement of small cross-border claims of less than €2,000. A judgement rendered within the context of this process is legal and enforceable in other Member States without a declaration of enforceability.

Enforcement of a claim will most likely be the last choice course of option for an SME. Ideally, an enforcement process can be avoided through SMEs being familiar with best practice in international contract design, and credit management.

The European Commission will host a free seminar in Dublin next week which aims to show SMEs how to structure their contracts, manage credit, and manage international trade risk. The seminar will also demonstrate how best to enforce legal actions across borders should there be no other options available.

The seminar takes place on Thursday 20th June at Chartered Accountant’s House, Dublin. It’s free to attend but places must be booked via: http://bit.ly/EUcbbIE A free guide to Cross Border Credit & Claims can also be downloaded from this site.

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