The lack of financial discipline in payments in commercial transactions between entrepreneurs and persons of public law is a perennial problem of the European economy. Late payments cause insolvency and complicate financial management of undertakings, which greatly reduces their competitiveness and profitability in the market. The risk of these adverse effects significantly increased in the period of the economic crisis. This article conducts a juridical and economic analysis of European legislation on combatting late payments in commercial transactions with a special accent being put on Croatian legislation, as the youngest European Member State.