Payment deadlines between enterprises

Newsletter - January 2017

Payment deadlines between enterprises obey strict rules that were set by the 2008 law on modernising the economy (“LME,” dated 4 August 2008). These rules have been modified by recent legislation, including the “Sapin 2” law (named for its sponsor) of 9 December 2016.

The principle

Payment deadlines between enterprises are typically set at the thirtieth day after receipt of the goods or performance of the service.

Exceptions: negotiated deadlines

A contract might specify a payment deadline of greater than 30 days, though it may not exceed 60 days after invoicing (or, stated alternatively, 45 days after the end of the month).

There are several payment deadline procedures possible:
– upfront payment: the customer is required to pay on the date the good is delivered or the service is performed;
– payment upon receipt: with a payment period of at least a week, including the time it takes for the invoice to arrive;
– payment with the default payment period: with a maximum deadline set at the thirtieth day after receipt of the goods or performance of the service (when there is no mention of deadline in the contract);
– payment with a negotiated deadline: special clauses that appear in the general terms and conditions of sale or that are agreed between the parties can extend the payment deadline up to 60 days after issuance of the invoice or at the end of the month after 45 days if that is stated in the contract.

The calculation system used and the payment terms must be specified in the general terms and conditions of sale or in the contract. The deadline of 45 days after the end of the month can be determined according to two methods:
– by adding 45 days to the end of the month in which the invoice was issued (an invoice dated 2 January must be paid before 17 March);
– by adding 45 days to the date on which the invoice was issued, the payment limit occurring at the end of the month in which those 45 days expire (an invoice dated 2 January must be paid before 28 or 29 February).

There are special deadlines for particular products, among them perishable goods, or in some industry sectors. For companies that purchase goods free of VAT so that they can deliver them outside the EU, the deadline can be set at 90 days from the date on which the invoice was issued.

Penalties for late payment and collection fees

The general terms and conditions of payment and/or the contract must specify the way in which penalties are to be applied and the interest rate if payments are late. In general, the interest rate used is the half-yearly key rate of the European Central Bank (ECB), in effect as at 1 January or 1 July, plus 10 points (0% + 10 points = 10% in the first half of 2017). However, it may be less, though it cannot fall below a minimum rate that is three times the official interest rate (0.90% as at 1 January 2017, i.e., 0.90% x 3 = 2.70%).

These penalties are payable automatically without a reminder being required: it is not necessary to send a registered letter with return receipt requested to trigger the right to charge penalty fees. Furthermore, they are not subject to VAT.

In addition, a penalty for collection costs, of € 40, is payable to the creditor to cover the estimated collection costs when a delay in payment occurs. This amount is added to the penalties for late payment, but is not included in the basis of calculation of the penalties. It must be noted that this collection fee is payable in full for each invoice, not for a collection of invoices concerned.


The Sapin 2 law increased the cap of the administrative fine incurred by the company when it fails to comply with the regulations on payment deadlines, which is now two million euro, compared with € 375,000 beforehand. What is more, a company that obtains or attempts to obtain conditions for payment deadlines that are clearly abusive, with the threat of breaking of commercial relations, now incurs a civil fine that can be as high as five million euro. It is to be noted that the fines imposed on companies are always published and accessible to the public.

We are entirely available if you have any further queries about the issues discussed in this newsletter or about any other accounting, tax, social security or law related topic.span>

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