ICISA’s Response to EU Late Payment and the “28th Regime” for Cross-Border Trade

ICISA has recently submitted responses to two European Commission initiatives with direct implications for cross-border commerce and everyday B2B transactions: the DG GROW SME Panel Survey on late payment and the consultation on a prospective “28th Regime” – an opt-in framework covering corporate, taxation, and insolvency law aimed at start-ups. 

ICISA’s input reflects members’ practical experience in credit insurance and surety across the Single Market and focuses on workable solutions that improve payment behaviour and legal certainty without disrupting financing channels that businesses rely on.  

Late payment: long-standing problems requiring practical solutions 

Background. Late payment remains a persistent drag on European SMEs and their suppliers. Recognising the problem, the Commission tabled a Late Payment Regulation (LPR) seeking to address payment behaviour and performance. As initially proposed, the LPR would have imposed a uniform maximum payment term of 30 days for all B2B transactions—irrespective of sector, supply-chain dynamics or the profile of the companies involved.  

While well-intentioned, such a blanket rule would have generated a large, immediate financing requirement which would not have been met by banks. ICISA highlighted this concern at the time, as well as echoing wider concerns about the impact of reducing commercial flexibility. Buyers and suppliers (with SMEs acting in different circumstances in both roles) benefit from the ability to negotiate terms suited to their risk, seasonality and working-capital profiles. Crucially, a one-size-fits-all cap targets the length of agreed terms rather than the causes of late payment, which often lie elsewhere—such as process frictions, billing disputes, or temporary liquidity stress.  

ICISA’s perspective. ICISA has long argued that improving payment behaviour is essential, but it cannot be pursued in a way that makes existing problems worse or creates new ones. In its response to the SME Panel survey, ICISA emphasised two major points:  

• Not all late payments are alike. Many late payments are not intentional decisions without justification; they arise from circumstances—administrative delays, disputes over delivery, or short-term cash-flow issues—and a significant share are eventually resolved. Lumping these cases together with genuine market abuses of payment terms obscures root causes and risks blunt policy responses.  

• Avoid punitive, automatic mechanisms that backfire. Harsh or automatic penalties can reduce a firm’s ability to bridge a temporary funding gap—paradoxically making it harder to settle invoices promptly after the shock has passed. Proportionate tools that distinguish – and specifically targe – abuse from other circumstance are more likely to improve outcomes. This could also focus on tools for more resilient supply chains within the EU’s single market. 

Taken together, ICISA’s message is that enforcement of agreed terms, transparency of payment performance, and targeted interventions against abusive practices are more effective than rigid, universal caps that disregard sectoral realities and financing capacity. The EU should instead focus on ways to support more resilient trade within Europe – including where SMEs are creditors or debtors – by enhancing access to information on available risk management tools, such as trade credit insurance. 

“28th Regime”: potential simplification for start-ups, but clarity and certainty essential 

Background. The Commission is exploring whether an optional EU-level framework, the so-called “28th Regime” could sit alongside national law to reduce legal fragmentation and compliance friction in cross-border activity for innovative start-ups and scale-ups. The idea is not to displace domestic regimes, but to offer an interoperable option that innovative businesses can elect where it simplifies various processes and rules which would apply in cross border trade.  

In principle, such an instrument could lower transaction costs and support scale for these companies – something seen as essential by Mario Draghi in his report on competitiveness and innovation in Europe. But to deliver those benefits, its interaction with existing systems must be unambiguous, and it must help finance and risk mitigation providers (banks, insurers, factors) to support trade with confidence.  

ICISA’s priorities for design and implementation. In its response, ICISA highlighted several practical requirements that determine whether the 28th Regime could work in day-to-day commerce:  

• Clarify the interaction with national law. The optional framework must spell out, with precision, how it coexists with domestic law to avoid dual-compliance burdens and legal uncertainty. Clear conflict-of-law rules and predictable points of attachment are essential so that parties—and their finance and insurance providers—know which rules govern which issues. 

• Introduce a clear notification process. When the 28th Regime is “opted into” there should be a simple, reliable mechanism to notify all relevant parties. That includes trade credit insurers, for example, so they are promptly aware of the choice of framework and any consequences for documentation, legal questions, or recovery processes. 

• Ensure transparent, efficient insolvency processes and legal clarity. The regime should promote predictable, timely insolvency procedures and set out how applicable law and jurisdiction are determined in cross-border disputes. This legal clarity reduces costs, accelerates recoveries and supports greater willingness to finance cross-border trade. 

• Protect subrogation and address core creditor rights. Insurers’ rights of subrogation must be protected and preserved so that risk transfer functions as intended after a claim payment. Other foundational issues—such as retention of title—require explicit, harmonised treatment to avoid gaps or conflicts that would otherwise undermine financing and risk mitigation. 

These features are not merely technical. They are foundational to ensuring that the 28th Regime can deliver real-world benefits: cleaner documentation, faster commerce, more predictable enforcement, and potentially, improved access to financing for businesses that trade across the Single Market.  

Next steps 

ICISA will remain engaged with EU institutions and stakeholders as both workstreams evolve. On late payment, the priority is targeted measures that lift payment discipline while safeguarding the financing channels firms rely on. On the 28th Regime, the focus is on ensuring legal clarity, operational certainty and creditor-rights protection. ICISA will continue to share market evidence so that emerging solutions are practical, proportional and effective for SMEs and larger firms alike.