Combating late payment in commercial transactions

Hereby, legislation combating late payment in commercial transactions is adapted to the European Directive 2011/7/EU which replaces Directive 2000/35/EG. This Directive was adopted following the so-called “small business act for Europe” of 25 June 2008 which aims to create a climate more favorable to SMEs, eliminating payment delays by providing effective legal appeal and imposing rules and harsher penalties for public authorities that fail to meet payment periods.

Figures show us that our country has about 19.15 billion euros in unpaid invoices, which primarly strikes SMEs with liquidity problems and in some cases bankruptcy as sad result.

The approved text provides that any compensation payment of a commercial transaction between undertakings must be made within a period not exceeding 30 days, whilst respecting their contractual freedom to agree a longer payment period. However, in cases where no payment period is provided, the payment period of 30 days is valid.

The same statutory period of 30 days applies to commercial transactions involving public authorities, but it can not be extended contractually to more than 60 days. An exception is made for public services that provide health care. They have a legal payment period of 60 days instead of 30, but without the possibility of extension.

After the payment deadline, the creditor is entitled to an interest at a rate which is equal to the sum of the reference rate and 8 percentage points. He is also entitled to obtain from the debtor, as a minimum, a fixed sum of 40 euros, without the necessity of a reminder and as compensation for the creditor's own recovery costs. In addition to this minimum sum, the creditor will be entitled to obtain reasonable compensation for any recovery costs exceeding that fixed sum and incurred due to the debtor's  late payment.

The draft law will be submitted to the Conseil d'Etat.

Key terms in the combat against late payment in commercial transactions :

• Late payment : payment not made within the contractual or statutory period of payment.
  
• Commercial transactions : transactions between undertakings or between undertakings and public authorities which lead to the delivery of goods or the provision of services for remuneration.
  
• Amount due : the principal sum which should have been paid within the contractual or statutory period of payment, including the applicable taxes, duties, levies or charges specified in the invoice or the equivalent request for payment.

We will keep you informed about further progress in this matter.

Source : Presse Release of the Council of Ministers of 22 March 2013.