30-day payment term becomes the standard in the EU. How do you deal with this?

Henrica Westhoeve
March 21, 2024 - Reading time 6 minutes

In the Netherlands, the payment term from large companies to SMEs has already been adjusted from 60 days to 30 days. Now it seems that the EU also wants to adopt a 30-day payment term, but for all commercial transactions and not just for large companies. Especially for SMEs, this is a positive development, but how do you deal with this as a company?

Power games

The European Union aims to protect SMEs, especially with the introduction of the so-called Late Payment Directive. SMEs are often highly dependent on large orders from corporations. Additionally, SMEs are often not very liquid, and due to the size of the orders, they are often 'forced' to agree to longer payment terms. Small businesses then lack the means to prompt the large company to pay on time, leading them to quickly fall into financial difficulties.

Late Payment Directive proposal

The proposal that is currently on the table boils down to the following four points:

  • The maximum payment term is 30 days (currently 60), and this applies to the vast majority of transactions between businesses and between businesses and government agencies;
  • Payment terms may not be extended arbitrarily; they can only be extended when it is reasonable for the creditor;
  • A debtor is automatically required to pay interest on overdue payments. Additionally, a creditor cannot simply waive this interest for the debtor;
  • Additional measures to protect creditors. All member states must appoint authorities responsible for strict monitoring and enforcement of this directive.

Current situation and new situation

Currently, if you conduct business in the Netherlands (including as a foreign company) and you are classified as a 'large company' according to the legislation, you must pay the SMEs within 30 days. With the possible introduction of the new Late Payment Directive, not only does the size of your company no longer matter, but as a business, you must adhere to a payment term of 30 days throughout the entire European Union.

Next steps

The likelihood of this law being passed is very high, and the current Dutch legislation will therefore be overridden by it. What can you do to prepare well for this change?

Conduct research on payment ethics

The payment morale of a company indicates how promptly a customer pays their invoices. Altares Dun & Bradstreet uses the D&B Paydex score for this purpose. It is based on millions of payment experiences and reflects how well a customer anticipates invoices. For example, a score of 100 means that a customer anticipates invoices excellently. A score of 50 indicates that a company is often up to 30 days late in paying an invoice. Analysis of thousands of bankruptcies from different countries shows a clear correlation between the risk of a company going bankrupt and the D&B Paydex score.

Read more: More information about the D&B Paydex

Send invoices promptly (with discounts)

Ensure that your invoicing system works well and that you can send invoices promptly (and automatically). Offer a discount on the invoice if it is paid more quickly. This incentivizes companies to pay their invoices faster.

Screen new customers for financial health

When new customers approach your company, it is wise, when they want to place an order, to conduct an investigation into their financial health. This can be done, for example, by using D&B Finance Analytics. A platform where you can find financial information about more than 500 million companies worldwide. Based on over 30,000 data sources, a credit limit is provided, you can view the Paydex, and you can find even more financial information. This way, you can be sure whether the new customer can pay the invoice and whether it will happen on time.

Interesting read: Credit Risks: To take, avoid or insure?

In general, the proposal for a new Late Payment Directive is a positive development, although many companies are far from ready for this change. However, we strongly recommend setting up the processes in the credit department in such a way that you are prepared when the new shorter payment term comes into effect. Do you have any questions or comments about payment terms as a result of this blog? We'd be happy to assist you. Fill in the form below, and we'll get back to you.


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