Legal payment term shortened

Do you, as a self-employed person or SME, supply goods or services to a large company? As of 1 July 2022, the legal payment term of monetary claims by your company has been shortened from 60 to 30 days. Large companies therefore must pay your invoices faster.

Image by Hands off my tags! Michael Gaida via Pixabay

To investigate whether your customer is obliged to shorten the maximum payment term to 30 days, check whether the company meets the following criteria:

  • the company has a balance sheet total of more than € 20 million.
  • the company has a net turnover of more than € 40 million.
  • the company employs 250 employees or more.

Does a company to which you supply goods or services meet at least two of the three above criteria? Then it is obliged to observe the shorter payment term. You can adjust the payment term on your invoice. If your company is a large company according to the above definition, then incoming invoices from smaller organizations must be paid within 30 days.

Extend payment term

 

Although payment deadlines are set by law, you can agree on a longer payment term in certain situations. The criteria for extending a payment term are as follows:

  • The debtor has objective reasons for derogating from the time limit.
  • The nature of the service requires a longer payment term.
  • Significant deviation from good commercial practice.

If you legally have a 'smaller company', then nothing changes in the payment term for incoming invoices. For these companies, the legislator had already included a payment deadline for pecuniary claims of 60 days. This period shall remain the same.

Transitional period for existing agreements

For existing agreements on your payment term, a transitional period of one year applies. As a result, payment terms on current agreements from before 1 July 2022 do not have to be shortened immediately. But as of 1 July 2023, these agreements must also be adapted to the shortened payment term. Does your customer not arrange in time for the payment term of 30 days to be observed? Then the clause in the agreement that establishes a longer payment term becomes legally invalid.

Overdue payments

If the invoices that you send to a large company as a self-employed person or SME are not paid within the legal payment term, you are entitled to penalty interest. The customer owes 8% interest on the invoice amount for the period that the payment is late. You can claim this commercial interest up to 5 years after the payment deadline. Any collection/procedural costs are also for the account of the defaulter (provided that he has no valid reasons - such as invalid performance - to exceed the payment term). You can (anonymously) report to the Overdue Payment tip off in the event of non-payment by a large company. An estimate is then made whether the company should be placed under supervision.

Payment term to foreign suppliers

If you sell goods or services to a Dutch large company as a non-Dutch company, this company is bound by Dutch law. That is why he must also pay foreign SMEs that deliver to him within 30 days. As a large company, do you take away from foreign SMEs? Then make sure that you pay your invoices within the new term, or that you adjust long-term agreements within a year.

Further information

On the English website for Dutch governmental information for entrepreneurs you will find more information about the halved payment term. Moneywood wrote this article about invoicing and VAT.