However, the EU concedes that late payment remains a major problem and is "hurting" many companies.
In February 2011, the EU enacted new laws which put in place strict measures to protect European companies against late payment in transactions with public authorities and other businesses.
But the European Commission admits that "more time is needed to allow all its effects to bear fruit."
This comes after the EU published the results of an online survey and public consultation of 2950 people on the effectiveness of the directive.
The poll involved 135 interviews with stakeholders from public authorities and businesses across the EU.
A progress report on the late payment directive says that it is still "at an early stage of its lifecycle."
It admits, "The improvements in average payment periods remain modest to date. Although companies are highly aware of their rights stemming from the Directive, usage of them is not yet widespread.
"Several factors appear to prevent an effective application of the directive, such as the lack of a common monitoring system, lack of clarity on some key concepts of the directive and the market imbalance between bigger and smaller companies.
"However, the directive is found to be coherent with other EU legislations and policies, is still relevant and has achieved EU added value."
The Commission now says that member states should "maintain the issue of late payment high on the political agenda by continuing to raise awareness of the topic at national level."
EU countries should also "encourage the development and implementation of supporting initiatives such as prompt payment codes, mediation and incentives for timely payment."
This includes, it says, "positive naming and shaming" of those companies that do not comply with the directive.
For its part the Commission says it will "assess at a regular basis the directive's impact and its success in reaching its objectives, bearing in mind that some effects are likely to take a longer time to materialise fully."
The Brussels executive says that national authorities have recognised the importance of combatting late payment and, where necessary, have adopted additional measures to ensure compliance with the directive.
Speaking in Brussels, European internal market, industry, entrepreneurship and SMEs Commissioner Elżbieta Bieńkowska, said: "We are monitoring the implementation of the late payment directive closely and have noted a steady decrease in average payment periods within the EU."
She added, "But late payment still hurts many companies, in particular SMEs, and ultimately the EU's competitiveness. Paying within the legal time limit of 30 days is proving challenging for public authorities.
"There is still work to do before a consistent culture of prompt payment becomes a reality. We encourage all EU countries to strengthen their efforts in combating late payment."
The report recommends further actions, in particular closer and more consistent monitoring of the evolution of average payment periods based on a common methodology.