Demonstrate company size of SME for payment term

The new scheme came into effect on July 1 this year, with a statutory payment term of 30 days for SME suppliers for large companies. Good news for SME entrepreneurs, but how does this work in practice? We received questions from various FHI members about demonstrating their company size.

Company size

In the case of an SME, a statutory payment term of 30 instead of 60 days will now apply. To demonstrate that you are an SME, you must meet at least two of these three points:

• The company has a balance sheet total of less than € 20 million
• The company has a net turnover of less than € 40 million
• The company employs fewer than 250 employees

This takes into account the 'legal entity' with which you do business. So the BV, NV, or cooperative that is on the invoice. As of July 1, 2023, this new arrangement also applies to agreements that were already made before July 1, 2022.

Practice

In practice, it appears that several large companies want to see proof that you actually fall under these standards and therefore fall under the new scheme. SME entrepreneurs are expected to be able to demonstrate this in various ways, for example by having forms completed. These forms request all kinds of company information. How can you deal with this as an SME entrepreneur?

Forms

The forms used are a means for large organizations to gain insight into the payment terms to be applied. Completing forms is an option, but takes administrative time. The question is also whether all requested information must be shared. Are there other ways for large enterprises to gain insight? And are you obliged as an SME to complete the forms (completely)?

Alternatives

FHI members may be expected to prove/substantiate that they are SMEs, so that they can rightly rely on the statutory payment term. An alternative is for FHI members to submit their annual figures (annual accounts), supplemented with a statement about the number of employees insofar as this is not included in the annual accounts.

If this is not desirable, because too much information is provided, you can discuss with the relevant large company whether you can perhaps issue an accountant's report. Therefore, if you, as an SME, have any doubts about the information to be provided, it may certainly be advisable to contact the relevant large organization to reach an agreement about what information to provide and what information not to provide.

Do you have any questions about the payment term and the alternatives following this article? Please contact Sander Pieroelie from FHI-Advies via legal@fhi.nl or 06 – 222 878 65.