The Payment Deadlines Observatory has just published its report for the year 2023. One piece of data draws attention: the amount of fines and pre-fines notified to companies by the DGCCRF for non-compliance with the regulations for deadlines payment increased by 74% in 2023.
Given the major impact of the new European Regulation currently being voted on, the latter provides for the reduction of legal settlement deadlines from 60 to 30 days. It is imperative for companies to assess the compliance of their internal supplier payment organization in order to avoid heavy fines and publication of the sanction decision.
Brief reminder of the applicable rules:
Article L441-10 of the Commercial Code sets the general rules relating to payment deadlines between companies:
- unless agreed between the parties, the payment deadline is set at 30 days from the date of receipt of the goods or performance of the service;
- the deadline agreed between the parties cannot exceed 60 days from the date of issue of the invoice (by way of derogation, a maximum deadline of 45 days end of month can be agreed);
Specific rules apply for certain sectors (30 days required for transport in particular).
Failure to meet payment deadlines is punishable by an administrative fine, set by article L441-16 of the commercial code, which can reach 2 million euros (4 million in the event of a repeat within two years) and which will be systematically published by the DGCCRF.
According to the rules provided for in guidelines published by the DGCCRF in 2021, the main criterion for determining the fine is the amount of cash retention generated by the breaches. This amount is calculated by adding the gains in working capital requirements (“WCR”) generated by late payment of the invoices concerned.
The result of this calculation is then adjusted taking into account in particular:
- the size of the company, depending on the importance of its turnover;
- the relative importance of the delay in relation to the maximum period provided for by the regulations (the shorter the period, the more serious the delay);
Summary of controls carried out in 2023:
The results of the controls carried out by the Administration (DRIEETS at local level and DGCCRF) in 2023 confirm the persistence of the findings made in previous years:
- the shortcomings noted mainly concern the ceilings applicable to agreed payment deadlines and those relating to goods transport services;
- the payment of transport services accounts for a good number of delays noted, due in particular to the validation difficulties inherent to the specificity of the service, which requires the establishment of processes for the reception and validation of transport documents, sometimes received late , further delaying the payment of benefits;
- the vast majority of controls carried out highlight failures in terms of accounting organization (validation circuits that are too long or too complex, outsourcing of payment circuits abroad).
Generally speaking, anomalies relating to the formality of invoices are persistent and are usually the subject of compliance orders. These difficulties can sometimes be caused by the supplier who will indicate on the invoice a payment date after the deadline for the applicable legal ceiling.
In addition, operators have difficulty understanding the principle of co-responsibility which provides that the seller is required to issue the invoice as soon as the delivery or service is provided, and that the buyer is also required to request it.
Many client companies indicate that they cannot systematically follow up, and this is a real source of incomprehension when the payment delays observed are mainly based on this reason.
However, the Administration is clear in its controls: a bad payer cannot blame his supplier who does not communicate the invoice in time for payment within the agreed deadlines.
The follow-up given to the findings made for the year 2023 are distributed as follows:
- 80 warnings (i.e. 30,41% of follow-ups): sending a letter to the professional for cases of non-significant exceedances, asking companies to comply with the regulations and advising them that a new inspection would take place subsequently and could, if necessary, where appropriate, give rise to sanctions;
- 12 injunctions to comply with legal obligations and to cease all unlawful actions;
- 171 reports of breaches, which gave rise to the imposition of an administrative fine (i.e. 65% of the cases);
In 2023, administrative sanction procedures represented a total fine of approximately €58,4 million (compared to €33,5 million in 2022).
The impact of the future European Regulation
The proposed Regulation 2023/0323 (COD) published in September 2023 stunned many economic players by lowering the legal deadline to 30 days without any sectoral exemption, constituting a sword of Damocles on the cash flow of the majority of companies concerned.
The position of the European Parliament adopted at first reading as part of the ordinary legislative procedure at the end of April 2024 has certainly softened the treatment: the Regulation should not apply to payments resulting from purchases, sales, deliveries, commissions or of agency operations contributing to the production of books.
In commercial transactions, the payment term should not exceed 30 calendar days. This deadline would apply both to transactions between businesses and to transactions between public authorities and businesses.
In commercial transactions between companies, when the contract expressly provides for it, the payment period could be extended up to 60 calendar days. In business-to-business transactions involving the purchase of slow-moving goods or goods of a seasonal nature, the payment period could be extended up to 120 calendar days, from the date of receipt of the invoice.
It will be necessary to determine whether the new majority in the European Parliament will modify this arrangement in the coming months.
Pressure remains on businesses to improve their payment times.
Philippe Jouvet
Partner
A lawyer specializing in competition, distribution and consumer law, philippe jouvet is an expert in the agricultural and agri-food sector.
Before joining Ginestié Magellan Paley-Vincent as a partner, Philippe Jouvet was Legal Manager for competition, distribution and consumption within the TEREOS cooperative, where he implemented the system provided for by the EGALIM Law.