Payment terms longer than 60 days are off the table for large companies
On 1 July 2017, the law to combat unreasonably long payment terms came into effect. Attempts had previously been made to reduce payment terms, including by means of the European directive on 'late payments' that was introduced in the Netherlands in 2003. However, this did not lead to the desired shortening of payment terms. What does this new law entail?
Size criteria
The law basically means that no final payment date can be agreed on more than 60 days after the invoice date if the debtor is a large company and the creditor (supplier, service provider) is a sole proprietorship or a micro, small or medium-sized legal entity. When is a company a large, medium, small or micro-company? This is evident from the table below:
| Criteria |
Micro |
Small |
Medium size |
Big |
| Value of assets as per balance sheet |
<€350,000 |
< €6,000,000 |
<€20,000,000 |
>€20,000,000 |
| Amount of net turnover in a financial year |
<€700,000 |
< €12,000,000 |
<€40,000,000 |
>€40,000,000 |
| Average number of employees in a financial year |
<10 |
<50 |
<250 |
>250 |
An enterprise falls into the category micro, small, medium or large if the enterprise meets at least two of the three criteria from the relevant category for two consecutive financial years. These size criteria are derived from and correspond to the size criteria in the annual accounts law.
Payment term
In concrete terms, this means that a sole proprietorship or a legal entity that is micro, small or medium-sized can object when a large company wishes to agree on a payment term that is longer than 60 days. What is more, even if the creditor does not object, the agreed payment term that is longer than 60 days does not apply. The payment term then automatically becomes 30 days. Exceeding the applicable payment term means that the debtor owes the so-called statutory commercial interest. At present, the statutory commercial interest amounts to 8 % per year. The (smaller) creditor can, if necessary, claim payment of that interest in court. For large companies, this means that in principle there is little point in agreeing on payment terms that are longer than 60 days. After all, they then run the risk that the (smaller) creditors will claim payment of that statutory commercial interest in court and such claims are at first sight ready to be awarded. If and to the extent that, for example, general purchasing conditions of large companies prescribe a payment term longer than 60 days, this must be adjusted to ensure that the legislation applicable from 1 July is complied with. The legislation applies to all agreements entered into on or after 1 July 2017. For agreements that already existed on 1 July 2017, the legislation will apply after 1 year, namely from 1 July 2018.
More information
Do you have any questions or would you like more information? BDO has an extensive team of legal specialists who can support you in complying with this upcoming legislation.
Nederlands