Interest rates for late payments in commercial transactions have increased to 12.5% - up from 12%, the Malta Association of Credit Management said in a statement on Friday.

Malta has been applying an EU directive against late payments for commercial transactions since 2012.

MACM said this piece of legislation was in itself being revised, and it could soon come into force as a regulation rather than a directive.

The association reminded suppliers of goods and services that:

• Creditors have the right to charge interest on late payment equivalent to 8% plus the ECB reference rate from the day following the date or the end of term for payment agreed in the contract of sale. When the payment terms are not specified in the contract of sale, the supplier is entitled to interest on late payment following thirty calendar days from the date of receipt of goods or services, or thirty days from the date of invoice.
• The period for payment agreed by the parties in the contract of sale may not exceed 60 calendar days. However, the parties may expressly agree for a longer period as long as the extension of time is not grossly unfair to the supplier.
• The supplier may proceed with the claim for late payment against the client without reminding the debtor that the amount is due.
• In the case of transactions between undertakings and public authorities, the period for payment shall be 30 calendar days if not expressly agreed in the contract and may not exceed 60 calendar days if fixed in the contract. However, in case the client is a public authority which carries out economic activities of an industrial or commercial nature and if the public authority provides health care, and the payment period is not expressly fixed in the contract, the payment period shall not exceed sixty calendar days.
• The agreement between the creditor and debtor to extend the date of receipt of the invoice is null and void.
• In addition to the interest charges on late payment, the supplier is entitled to reasonable compensation for the supplier’s own recovery costs at a minimum of €40.
• When the contract of sale provides for the retention of title between the seller and the buyer, the seller is entitled to retain title over the goods until the price has been paid in full by the buyer.