Stricter payment terms applicable in B2B contracts

With this law, the legislator wishes to protect smaller economic actors and companies with activities dependent on other actors, by limiting contractual freedom that may be detrimental to them.

1. Previous regulation and its difficulties

We know that 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 abused 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, who have very little bargaining power over larger groups and too few cash reserves to realistically cope with such payment terms. As a result, suppliers, which often are smaller businesses, were put under pressure. Those who did not agree risked losing large contracts.

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.

Any clause derogating from these time limits was deemed to be unwritten, with the result that the legal time limit of 30 days was applicable.

2. The new law extends the protection

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 law also provides for a standard payment term of 30 days between companies after receipt of the invoice, which can be extended to 60 days by means of an agreement.

Only sectors defined by the government, in consultation with the SME Council, can extend this period for certain special cases.

Any legal or contractual verification period for goods or services is now included in this maximum period of 30 days.

Furthermore, the law prohibits the creditor and debtor from contractually specifying the date of receipt of the invoice. This prevents companies from having to accept false invoice dates under pressure in order to circumvent the 30-day legal time limit.

Late payments are automatically sanctioned by means of late payment interest.

To conclude: the terms of payment between businesses will be 30 days from the receipt of the invoice, and contractually extendable to no more than 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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Discover our e-book about unfair terms in B2B contracts

In our e-book “Unfair terms in B2B contracts” you will discover a number of interesting tips to familiarize yourself with the new principles of the B2B law.