Stricter payment terms will ensure faster payment in commercial transactions starting February 1, 2022

The Act of August 2, 2002, on Combating Late Payments in Commercial Transactions is an important tool for dealing with defaulters. In practice, however, this Act has proven insufficiently effective in curbing the growing problem of late payments. With the Act of August 14, 2021, which will take effect on February 1, 2022, the legislature is seeking to remedy this situation.

The Act on Late Payment in Commercial Transactions governs transactions between businesses or between businesses and government agencies regarding the supply of goods or the provision of services. Consequently, this Act does not apply to transactions between businesses and consumers.

In principle, a payment term of 30 calendar days applied to B2B transactions, but the parties were permitted to deviate from this by mutual agreement. Only for specific transactions (including invoices issued by SMEs and invoices to government agencies) was the option to deviate capped at 60 calendar days. In other commercial relationships, therefore, the parties could agree on a payment term longer than 60 calendar days.

The amending law has standardized the maximum payment terms for all commercial transactions, regardless of the nature of the parties involved. Effective February 1, 2022, the maximum payment term for all commercial transactions between businesses or between businesses and government agencies is 60 calendar days. This payment term begins on the day following: * the date of receipt of the invoice; or * the day the goods or services are received, if the date of receipt of the invoice is not certain or if the invoice was received before the goods or services were delivered; * the day of acceptance or inspection to verify the conformity of the goods, if such verification or inspection is required by law or contract. In practice, this means that if contracts or invoices provide for a payment term longer than 60 days, the statutory payment term of 30 days applies, and interest begins to accrue on the 31st day. Caution is therefore advised with invoices that specify a payment term longer than 60 days. After all, such agreements are “overruled” by the new law. This could result in an automatic increase due to interest and a flat-rate compensation for collection costs if, as the debtor, you were to pay the invoice after 30 days. The standard payment term—in the absence of any agreed-upon deviation—remains 30 days.

Until recently, companies could contractually agree on the invoice receipt date. As a result, the start of the payment period could also be artificially delayed. From now on, deviating arrangements regarding the invoice receipt date will no longer be permitted. Furthermore, the law now stipulates that the debtor must provide the creditor with all necessary information no later than the time of receipt of the goods and services, so that the creditor can issue the invoice in a timely manner.

If the law or agreement provides for acceptance or verification of the conformity of the goods or services, the period begins on the day following such inspection or verification. The old law limited the period for inspection and verification to a maximum of 30 calendar days. In specific cases, this period could be extended provided that the creditor was not an SME and this was expressly agreed upon by the parties. Many companies took advantage of this provision, as it allowed them to extend the payment term. The current law puts an end to such practices. As of February 1, 2022, the review and verification period will form an integral part of the payment term. Consequently, both the review and verification period and the payment term will together be limited to a maximum of 60 days.

The old law stipulated that interest began to accrue automatically upon the expiration of the payment deadline and that the creditor had the option of charging a flat fee of 40 euros in the event of late payment. A seemingly minor textual change to the law means that, as of February 1, 2022, the outstanding debt will automatically be increased by interest and a flat-rate fee of 40 euros. As a result, it will no longer be possible to pressure the creditor to waive this interest or fixed compensation.

The changes mentioned above could have a significant impact on your commercial transactions. It may therefore be advisable to review your general terms and conditions, your terms of sale and purchase, and your invoicing terms. As your trusted partner, Crauwels Advocaten is, of course, happy to assist you with this. Let us review your general terms and conditions to ensure you are fully compliant and do not end up at a disadvantage in a dispute or face any unpleasant surprises. Please feel free to contact one of our specialists.