STARTING a company may only need as little as €1 in capital once a planned new law comes into effect and which is seeking to encourage entrepreneurs and provide greater protection against insolvency through non-payment by corporate clients.
The forthcoming Law of Business Creation and Growth, currently being discussed and worked on in the Council of Ministers, seeks to 'remove obstacles' in the 'establishment and economic viability' of companies.
One issue that most threatens this 'viability', the government recognises, is lack of cashflow and solvency where firms are not paid by their clients within the legal maximum of 60 days – which reduces to 30 days in some circumstances.
This is a particularly serious problem for the self-employed, sole traders and small businesses, where they are owed money by big companies they do work for and effectively allow these to fail to pay up on time – or even at all – since they fear losing a major customer or ruining their relationship with the corporation, the Council of Ministers argues.
For this reason, the unpaid worker 'does not tend to demand the compensation they are legally entitled to' in these situations, such as the costs of chasing up the debt and interest payments, 'even though it puts pressure on their profit margins'.
Given that this imbalance of power renders penalties and punishments pointless in most cases, the government intends to introduce incentives for prompt payment in the new legislation.
Another aid to early payment will be the launch of the so-called 'digital invoice', the form and structure of which has not been detailed as yet, but will make settlements more transparent, as it will be much easier to see when a company has paid a trader who has carried out work for it.
Even if the trader does not use this as clear proof of a corporate client's late payment or non-payment, the figures will be accessible by public authorities.
This will come accompanied by a general rule that firms which pay their workers', suppliers' or contractors' invoices late, or fail to do so, will not be eligible for any public funding they may otherwise be entitled to.
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