Paying invoices is an essential step in any business relationship, whether it's the sale of goods or the provision of services. Whether you are an individual, a business, or a professional, it is crucial to fully understand your rights and obligations when it comes to billing and paying invoices. Indeed, compliance with the rules related to invoicing, payment deadlines and the consequences of a delay is fundamental to ensure transparent commercial transactions and avoid conflicts. This article summarizes everything you need to know about paying invoices, applicable deadlines, and the consequences of non-payment.
Invoices, whether issued by a professional or an individual, must comply with certain presentation rules, mainly stipulated by the General Tax Code (CGI) and the Commercial Code. To be considered valid, they must include a certain amount of mandatory information, both for the sale of goods and for the provision of services.
Here are the main mandatory details that an invoice must include:
Electronic invoices, which are becoming more and more common, must respect the same rules as paper invoices. They must be kept for the legal period and must be able to be archived in secure conditions. In addition, they must include an electronic signature in the case of certain transactions, in order to guarantee their authenticity. Businesses are therefore required to issue electronic invoices in accordance with current legislation, in particular that imposed by the European Union and the European Central Bank (ECB).
Invoices, whether physical or electronic, must be kept for a minimum period of 10 years from the date they are issued. This retention obligation concerns businesses as well as professionals and individuals in certain cases (in particular in the context of professional activities).
Invoices must be kept as is and cannot be changed once issued. In the event of a tax audit, it is important to be able to produce all invoices issued during the period in question. This also applies to periodic invoices, for example in the context of service contracts that generate recurring invoices.
Failure to keep invoices may result in tax penalties. Indeed, in the event of a dispute or control, the absence of an invoice may constitute a breach of the company's fiscal obligations and result in a fine. In addition, the company may be unable to justify its revenue or expenses, which could harm its legal and financial situation.
The payment of an invoice is a legal obligation that must be respected by the customer within the time limits agreed between the parties. In general, the payment term is fixed when the contract is signed, but in the absence of explicit mention, the law imposes a maximum delay. In France, the standard payment term is 30 days from the date of receipt of the invoice. However, this delay may vary depending on the nature of the transaction.
The Commercial Code specifies that, in the context of commercial transactions, payment terms must not exceed 60 days from the date the invoice was issued or 45 days end of month. In addition, in the case of the provision of services or the sale of goods, if no deadline is specified in the contract, the payment term is set at 30 days from the date of receipt of the invoice, in accordance with legal provisions.
It is possible to provide for longer payment terms in the general conditions of sale, but it cannot exceed the limits set by law.
There are cases where payment terms can be changed or extended, such as in the context of distance sales or contracts with businesses that benefit from deferred payment. However, these conditions should always be clearly defined in the contract. For example, in the context of international transactions, the payment term may be set according to the commercial rules in force in the country concerned.
In the event that the payment of an invoice is delayed, late payment interest may be applied under the general terms and conditions of sale, unless another term has been agreed between the customer and the supplier.
Non-compliance with payment deadlines can lead to several consequences for the customer, but also for the creditor company. Here are the main sanctions and measures to take in case of late payments:
The main effect of late payments is the application of late payment interest. According to the Commercial Code, this interest must be calculated on the basis of a reference rate, which is the rate applied by the European Central Bank (ECB) for its latest refinancing operations, plus 10 percentage points. For example, if the ECB rate is 0.50%, the late payment interest will be 10.50%.
Since 2013, the legislation also provides for a lump-sum compensation recovery in case of late payment. This compensation amounts to 40€ for claims of any kind. This amount may be increased if the actual collection costs exceed this amount. This right to compensation must be mentioned in the general conditions of sale.
In addition to interest and lump-sum compensation, late payments can also lead to legal proceedings. The creditor company can then go to the competent court to obtain payment of the unpaid invoice, as well as damages. Depending on the amounts involved and the circumstances, recovery actions may be put in place.
In the event of a significant delay in payment, the company may decide to suspend the supply of goods or services until the invoice is paid. However, this measure must be provided for in the general conditions of sale or specified in the contract signed with the customer.
In order to avoid ambiguity and to guarantee timely payment, it is essential that the company foresees in its general conditions of sale (CGV) the terms of payment. These conditions should clearly mention the payment term, the late payment penalties, as well as the additional costs in case of non-compliance with the conditions. It is also advisable to specify whether discounts or discounts are offered in case of advance payment.
In a commercial contract, it is possible to set specific conditions concerning the terms of payment, such as payments in several installments, deposits, or even specific conditions related to the nature of the products or services. This legal framework makes it possible to secure transactions and to prevent disputes.
Paying invoices is a fundamental aspect of any business transaction, and complying with payment deadlines, billing obligations, and specific terms set out in contracts is crucial. In the event of late payment, businesses can apply penalties and start recovery procedures. To avoid any conflict, it is imperative to clearly define the terms of payment as soon as the contract is established, to respect the legal deadlines and to keep track of exchanges. By complying with these rules, both creditors and debtors can protect their interests and ensure the smooth flow of business transactions.
