From February 1, 2022, a maximum payment period of 60 days will apply in commercial transactions. In this way, the legislator is trying to offer the smaller company the necessary support in its negotiations with the larger players and thus reduce possible cash flow problems. Until recently, companies were indeed much freer in this respect and it was often the larger players who determined which terms were the rule. So it's time for a stricter payment term and consequently also time to re-examine your general terms and conditions.
Payment due by 01/02/2022
If the parties do not agree on anything in their invoice terms or contract, a statutory payment term of 30 days applies in principle. Until recently, parties could deviate from this and jointly choose to extend or shorten this payment term. The reality, however, was different. Larger companies often imposed very long payment terms on their smaller contract partners (SMEs), who had little or no room for negotiation to oppose this. As a result, SMEs all too often ran into liquidity problems.
In 2019, the legislator therefore decided to protect the SME. It became legally prohibited to agree (or 'enforce') a payment term longer than 60 days in the event that the creditor is an SME and the debtor is not an SME. This meant that large players could still agree longer payment terms among themselves.
However, larger companies sought new ways to avoid the mandatory protection measure. For example, the date on which the payment period would start was used creatively. For example, the payment period would only start after the goods had gone through an inspection process. Another way consisted of artificially determining the 'date of receipt' of the invoice that made the term of payment start e.g. 10 days after the invoice date. Practices that thus ensured that the maximum payment term could be circumvented.
Payment term as of 01/02/2022
In order to put a stop to further abuse, a new bill was recently approved that puts an end to these creative methods and introduces the following rules, among others:
- From now on, the maximum payment term will be 60 calendar days in all commercial transactions governed by Belgian law, regardless of the size of the companies. This applies to commercial transactions between (1) SMEs, (2) SMEs vs. non-SMEs and (3) non-SMEs vs. non-SMEs. If a longer payment term is agreed, it will be considered as 'non-written' and the legal term of 30 days will revert to it.
- Imposing a check and verification period remains permissible but will be an integral part of the maximum 60-day payment period.
- The receipt date of the invoice may no longer be contractually defined.
This is the perfect time to review your current general terms and conditions and to check whether they comply with the new legal provisions.