On 14 August 2021, the European Commission adopted a new law that strangely enough went rather unnoticed. This very important law aims to regulate the payment terms that can be contractually set within the framework of B2B contracts. With this law, the legislator wants to protect smaller economic actors and companies with activities dependent on other actors, by limiting contractual freedom that may be detrimental to them.

The legal term for paying an invoice is 30 days. Before the new law, however, nothing prevented businesses from agreeing on a different payment term. It therefore often happened that a debtor who was economically stronger than the creditor took advantage of his position against a small contractor. Suppliers were often put under pressure to accept payment terms longer than 30 days even up to 120 days or more. This was a particularly heavy burden for SMEs.

On 29 April 2020, the legislator already intervened for contracts concluded from that date on by providing that, where the creditor is an SME, the agreed payment term may not exceed 60 days.

Furthermore, according to this law, when the agreement between an SME creditor and a debtor that is not an SME, provided for a payment term starting from the acceptance or verification of the conformity of the goods or services, the acceptance or verification procedure may not exceed 30 days.

However, this provision only applied to SMEs, i.e. an enterprise meeting at least two of the following criteria:

  • an annual average of 50 employees,
  • an annual turnover excluding VAT of EUR 9 million, and
  • a balance sheet total of EUR 4.5 million.

The new law abandons the latter system and no longer makes a distinction between types of enterprises, thus avoiding any debate about whether an enterprise is an SME or not.

The new law provides for a standard payment term of 30 days between companies after receipt of the invoice, which can be contractually extended to 60 days. The parties, regardless of the size of the enterprise, will no longer be able to agree on a payment period of more than 60 days.

The law will enter into force on 1 February 2022.

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