Combating of late payments in commercial transactions strengthened

Healthy cash position

The law of 2 August 2002 combating late payments in commercial transactions introduced a number of measures to keep the cash position of companies, and especially SMEs, healthy. The legal establishment of payment periods and interest rates has led to an improvement in payment behaviour between companies. The new substantive adjustments that apply from February tighten this regulation further.

The principles of 2002

The standard payment period for commercial transactions between companies is 30 calendar days if the contract does not specify a payment date or payment period.

If the creditor is an SME and the debtor is not, the parties may stipulate a maximum payment period of 60 days. An SME is a company that meets the criteria of the Companies and Associations Code. In other cases, such as, for example, between two non-SMEs, a payment period longer than 60 days may be agreed.

The payment period shall start from:

• The day of the receipt of the invoice by the debtor; or
• The day of the receipt of the goods and services if the invoice was received before that date; or
• The day of the acceptance or inspection of the goods or services by the debtor if the invoice has been received before that date. For calculation purposes, the acceptance or inspection shall take place no later than 30 days after delivery.

If parties do not make an agreement on interest rates, the legal interest rate for late payment in commercial transactions shall apply. This rate is 8.0% for the second semester of 2021, which is a lot higher than the legal interest rate of 1.75% for the year 2021.

A judge may subject contractual deviations in terms of interest and deadlines to a fairness test.

What will change in 2022?

Almost 20 years later, the legislator has stepped up a gear and changed the content of the law, in terms of both the determination and the calculation of payment periods.

Payment periods

It is no longer possible to set a payment period longer than 60 calendar days.

• Parties can still extend the 30-day payment period, but only to a maximum of 60 calendar days for all commercial transactions, regardless of whether an SME is involved.
• If a payment period longer than 60 calendar days is agreed, the statutory payment term of 30 calendar days will still apply. A sectorial deviation is possible by Royal Decree.

Calculation of payment periods

Imposing or agreeing on payment periods longer than 60 days, or building in mechanisms to extend them beyond 60 days is now discouraged.

• It is no longer possible to make a contractual arrangement for the receipt of the invoice. This was previously often done in order to extend the payment period.
• The 30-day extension of the time limit for inspection or acceptance has been removed. Many companies have tried to extend the payment period to 90 days in this way.
• From now on, the information that allows the invoicing must be provided by a debtor, at the latest, upon the delivery of the goods or services. This was previously sometimes done too late, so that the creditor could not issue a valid or compliant invoice.

Update your sales conditions

The amendment to the law was published in the Belgian Official Gazette on 30 August 2021, and will enter into force on 1 February 2022. You would therefore be well advised to take a look at your general terms and conditions of sale, and to amend them in line with these changes where necessary.

Would you like more information or help in amending your general terms and conditions of sale? We will be happy to help you. Please don’t hesitate to contact the experts in our Business Legal team.