1. Core principles of the new law on payment periods
The new law has a broad scope of application. The rules on payment periods now apply consistently across all B2B contracts (ongoing and new ones) regardless of the size of the companies concerned.
Since 1 February 2022, the following legal rules apply to B2B payment periods:
- A standard payment term is 30 days.
- Parties can contractually agree on the option to have a payment term of 60 days maximum.
- This payment term includes a verification term/period to check the invoice.
- The payment term starts to run:
- from the date you have received the invoice; or
- on the day you have received the goods/services if the date of receiving the invoice is not a fixed date or if the invoice was received before the delivery of the goods or services.
- It is forbidden to set in the contract the date when one is to receive the invoice.
- Late payments are automatically penalized by the charging of late interest, and the creditor is entitled to a lump-sum compensation (EUR 40) to cover its collection costs.
Any provision/clause in a contract that provides for a longer payment term is void and is therefore considered never to have been written. In such scenario, the statutory payment term of 30 days from the date of receipt of the invoice will then apply.
If your ongoing contracts are not yet aligned with the new law, which applies to them immediately, your creditor may well seek payment from you earlier than you expect, or if you’re a creditor, you will be able to collect payment of your invoices sooner.
2. Payment periods in public contracts
Does this law end the historically long payment periods in ongoing public contracts?
Although the Act of 1 August 2002 applies to commercial transactions between businesses or between companies and government bodies, Article 3 of the Act reads:
“This law applies to all payments for commercial transactions.
It applies also to commercial transactions between companies and government bodies in which the debtor is a government body in the sense of Article 4, §23, subject to the regulation on public contracts and concessions concerning the rules on verification and payment, such as those contained in the general implementation rules.”
As mentioned earlier, the law still provides for an exception for public contracts.
This exception entails that if you, as a company, conclude a contract with a contracting authority (hospital, OCMW, municipality, regional/federal government, police corps, …) for the performance of a public contract (for works/services/delivery of goods), the public procurement legislation and the Royal Decree implementing it in particular remains applies unchanged.
For these types of contracts, your company, as the contractor, will still have to take into account the longer payment periods (see Arts. 95, 127, and 160 of the Royal Decree implementing the public procurement law):
- A standard verification period for the contracting authority is 30 days.
- A standard payment term for the contracting authority is 30 days.
- A special payment term for the contracting authority is 60 days if the authority provides healthcare and if it is specifically recognized for that purpose, i.e., only for the works specifically linked to that specific activity (e.g., hospitals)
In actual terms, you must therefore take into account a payment term of 60 days (30 days for verification and 30 days for payment) up to 90 days (30 days for verification + 60 days for payment).
3. Limited-value contracts (accepted invoice)
The strict public procurement legislation also provides for a special scheme for public contracts with a limited value.
Under Article 92 of the Public Procurement Act of 17 June 2016, contracting authorities can award public contracts with an estimated value of €30,000 to a contractor based on an accepted invoice. This means that the public contract between the contracting authority and the contractor is concluded when the contracting authority issues the contractor a purchase order. The invoice (issued by the contractor) is then valid proof a concluded public contract.
For example, if a municipality wishes to purchase air conditioning equipment or several computers for less than EUR 30,000, it does not have to call a public tender.
For such public contracts, Article 5, para. 2 of the Royal Decree implementing the public procurement law stipulates that the provisions of the implementing Royal Decree do not apply (unless, of course, the procurement documentation stipulates otherwise).
Now it gets a bit technical. In actual terms, this means that in such scenario, the legal rules on payment periods in public contracts (Articles 95, 127, and 160 of the Royal Decree implementing the public procurement law) do not apply.
In these scenarios, the Act of 2 August 2002 on combatting late payments in commercial transactions does apply. A government authority in these cases must therefore pay within the statutory payment term of 30 days (with the option to have it extended contractually to a maximum of 60 days).
Still have doubts about how these rules apply to your business? Contact us now.