4 January 2022

New legal maximum term of 60 days for payment of B2B invoices

It is crucial for the financial health of any company to possess the necessary liquidity. The applicable payment term in B2B transactions plays a key role in this regard. The recent Act of 14 August 2021 aims to further improve payment behaviour between companies.

A triple jump

Since the Act of 2 August 2002 on combating late payment in commercial transactions, companies have already enjoyed a certain legal protection against co-contractors who do not fulfil their payment obligations or who fulfil them belated.  This Act provided for a default payment term of 30 days, but it was possible to deviate from this in a contract.  The intended legal protection thus turned out to be quite relative in the commercial practice.

Subsequently, the legislator has implemented stricter rules in 2013 and 2019, such as a maximum payment term of 60 days between an SME – creditor and a large company – debtor.  Also the period given to the customer to check the conformity of the delivery, was limited to a maximum of 30 days.  However, by always providing such a verification term in the contract, the total payment term could in practice still be increased to 90 days.

With the recent Act of 14 August 2021 the legislator is now aiming to further tighten these rules and thus close potential loopholes.

The legislation is being tightened …

First of all, the law provides for a maximum B2B payment term of 60 calendar days, in principle starting from the receipt of the invoice.  The scope of this rule is particularly wide and extends to all commercial transactions governed by Belgian law, regardless of the size of the companies involved.  If the parties would still draw up a contract with a longer payment term, then such clause will be considered null and void, meaning that one will in principle fall back on the legal default term of 30 days.  However, the law does provide that a Royal Decree can authorise a longer payment term for certain specific sectors;  it remains to be seen where this will possibly be applied.

… and potential loopholes are closed

The use of an additional verification term to (artificially) extend the payment term is now legally restricted: such term is henceforth an integral part of the maximum payment term of 60 days.

Other ways of circumventing the mandatory shorter payment terms (under pressure from the debtor) are also targeted: for example, it is now prohibited between all companies to contractually fix the receipt date of the invoice (e.g. by determining that invoices may only be issued after a certain period).  In addition, the debtor must provide the creditor with all information necessary to issue the invoice, no later than at the time of receipt of the goods or performance of the services.  This is of course corresponding with the VAT obligation to issue an invoice within a certain period.

Undoubtedly, many discussions will still arise in practice.  One may think of, e.g.: goods that are in transport for a considerable amount of time; specific payment techniques such as documentary credits where the invoice and (legal) delivery in itself are not always sufficient to be entitled to payment; partial deliveries where a discussion arises whether or not these could already be invoiced although the total order has not yet been completed; all sorts of commission- and bonus systems that are only settled annually, etc.

Entry into force

The new legislation will enter into force on 1 February 2022.  Since this legislation is mandatory, it will also apply to existing contracts.  It is therefore advisable to consider what impact this may have on a company’s working capital, and to start in good time with bringing contracts and general terms and conditions in line with these principles. 

Wibo Van Poeck en Bruno Thoen
De Langhe Advocaten

Published in VOKA – Ondernemers, VOKA Kamer van koophandel Oost-Vlaanderen, edition November 2021

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