Payment deadline: all you need to know

Payment terms are an essential part of business relationships between businesses. Whether you are a supplier or a customer, understanding payment terms, their regulations and the impact of non-compliance with them is crucial for the good management of your cash flow and your commercial relationships. This comprehensive guide to payment deadlines will explain everything you need to know to better manage your bills and avoid late penalties.

What is the payment term?

The payment term is the period between the issuance of an invoice and the deadline by which it must be paid by the customer. This period may be determined contractually between the parties or be governed by the legislation in force. A well-defined payment term allows businesses to maintain healthy cash flow management, and prevents late payments that may lead to financial penalties.

Payment terms in France: regulations and legal framework

In France, payment terms are governed by the Economic Modernization Act (LME), enacted in 2008, as well as by European regulations. According to this law, the legal payment term in most cases is 30 days from the date of receipt of the invoice. However, a longer period of time may be agreed between the parties as part of a contract. It is also possible to attach specific payment terms for specific business sectors, such as the transport sector, where longer deadlines can be negotiated.

If there is no mention of the terms of payment in the contract or general terms and conditions of sale (CGV), the legislation imposes standard deadlines. For example, in many cases, the payment term will be 45 days end of month or 60 days maximum from the date of issue of the invoice.

The role of the general conditions of sale (GTC)

Les general conditions of sale play a key role in managing payment terms. They define the terms of payment of invoices between the supplier and the customer, and make it possible to determine the terms of payment specific to each transaction. The GTC may indicate, for example, that a payment must be made to receipt of goods, or according to specific modalities such as 30 days after the end of the month in which the invoice was issued.

It is therefore essential for a company to clearly indicate the terms of payment on its invoices sent and to establish a trade agreement accurate with its customers. This will avoid excessive payment terms and will ensure a quick settlement bills.

Calculating the payment term

Calculating the payment term is relatively simple, but it is important to know the different terms and conditions. In general, the deadline starts to run from the date of issue of the invoice. For example, if an invoice is issued on 1 March, a 30-day payment term will end on 31 March. However, if the contract provides that payment must be made At the end of the month in which the invoice was issued, the payment term will be pushed back to Last day of the month of March, which is March 31, regardless of when the bill was issued.

In some cases, it is possible to add additional days based on sectors of activity. For example, in the construction sector, it is not uncommon for payment terms to be longer, with payment to 45 days end of month or even 60 days, in some cases.

Late payment: what are the consequences?

When the payment term agreed is not respected, the creditor company may be obliged to use legal means to recover the amounts due. Indeed, a late payment may result in a variety of consequences, including late payment penalties. These penalties can be specified in general terms and conditions of sale (CGV) or agreed directly in the commercial contract.

In France, the late payment penalty Payment is fixed by law at an interest rate equivalent to 3 times the legal interest rate in force. These penalties are applicable from day following the due date of the invoice, without the need for a prior reminder. In addition, collection costs may be added to the amount due, in accordance with the rules defined by the legislation.

The different types of payment terms

There are several types of payment term, each adapted to a specific context or sector. The main categories are:

1. Standard lead time (30 days) : In general, the payment term is 30 days after the date the invoice was issued or 30 days after receiving the goods or the performance of the service. This time frame is often used in commercial contracts.
2. End of month deadline : The delay is then calculated from the End of the month in which the invoice was issued, and payment must be made at the end of the following month.
3. Payment upon receipt of the invoice : In some cases, the shopper shalt pay a bill upon receipt, without further delay. This type of payment is often applied in business relationships where trust is already established.
4. Longer time frame for some sectors : Some sectors such as transport sector Or the erecting can benefit from longer payment terms due to the nature of their activities.

How do you avoid late payments?

1. Set clear conditions : As soon as the contract is signed, it is important to agree on a payment term accurate and to clearly inform the shopper. The addition of a specific payment term In the general conditions of sale will reduce the risk of misunderstandings.
2. Payment tracking : Once the bill is issued, make sure that your shopper Respect the payment term agreed. It is advisable to establish a reminder procedure in case of late payment.
3. Implementation of late penalties : If you do not want your business to fall victim to bad payers, the introduction of late payment penalties in your commercial contracts is an effective deterrent.
4. Reduction in payment terms : If you have cash flow problems or want a quick settlement of your bills, it may be a good idea to reduce your payment term and ask your customers to pay more quickly.

Cases of non-compliance with payment deadlines

The Non-compliance with payment deadlines may result in sanctions. If a shopper exceeds the time limit, administrative fines may be imposed. According to European regulations, the creditor may also refer the matter to the competent courts to obtain payment of the sum due, as well as late payment interest. These sanctions are intended to protect businesses, especially small and medium-sized businesses, against bad payers.

Conclusion

Les payment term is an essential aspect of corporate financial management. Respecting these deadlines and agreeing on clear terms for paying invoices is crucial to maintaining good commercial relationships and avoiding financial penalties. For businesses, it is essential to indicate the payment deadlines on each invoice, to monitor payments in real time and to set up follow-up procedures in case of delay. Les late payment penalties should also be taken into account, in order to reduce the risks of Exceeding payment deadlines and guarantee the financial health of the company.

Thanks to an application like Bill Up, it's becoming easier to track and manage invoices sent, to indicate the payment terms, and to set up automatic reminders in case of delay. Effective management of payment deadlines will maintain the fluidity of your cash flow and ensure the payment of invoices within the time limit.

‍