The statutory payment term is there to protect you as a company. It prevents you from having to wait too long for your money when you make a delivery or carry out an assignment. Keep in mind that stricter rules apply to large companies than to self-employed persons and SME organisations.
What is the legal payment term?
The legal payment term determines the maximum payment term, at the moment you conclude an agreement with a customer or supplier. The maximum legal term that applies depends on the type of customer you do business with. The rules for large organizations are stricter than those for small companies. And do you do business with the government? Then other guidelines apply.
It is advisable to include clear payment terms in commercial contracts and invoices to your customers, so that there are no misunderstandings about the payment term. It is also good to know that fines can be imposed if these payment terms are not met, such as the statutory interest and collection costs. We have created a special page where you can calculate the legal collection costs, take a look and calculate the legal collection costs .
Law against unreasonably long payment terms
In the Netherlands there is a law that prevents unreasonably long payment terms, the Law against unfair commercial practices ( Wet Toh or law payment terms ) that was introduced in 2021. This law is intended to counter unfair commercial practices, including unreasonably long payment terms. Businesses that fail to comply with this law may be subject to fines or even forced to change their practices. The clients who impose these periods are also responsible. You can report (anonymously) to the Reporting Center for overdue payments of the Netherlands Authority for Consumers and Markets (ACM).
Statutory payment term for consumers
Please note: do you deliver to private individuals/consumers? There is no statutory payment term for this. It is important to make mutual agreements about this and to hold the private individual to it when payment is not forthcoming.
Statutory payment terms for SMEs/self-employed persons?
For small and medium-sized enterprises (SMEs) and self-employed persons ( self-employed persons without employees ), the same statutory payment term applies as for other companies and authorities. If no payment term has been agreed for an invoice, the standard payment term is 30 days. If a payment term has been agreed, it may not be longer than 60 days. This applies to both invoices to business customers and private individuals. This therefore applies to both SMEs and freelancers.
Large companies must pay SMEs within 30 days
A company is a large company if it meets 2 of the 3 characteristics:
- the company has a balance sheet total of more than € 20 million
- the company has a net turnover of more than € 40 million
- the company has 250 employees or more
This involves looking at the ‘legal entity’ with which you do business. So the BV, NV, or cooperative that is on the invoice.
In the Netherlands there is a law in force ( Article 6:119a BW ) that obliges large companies to pay smaller companies (also referred to as “SMEs”) within 30 days of payment. the invoice date. This law is designed to help SMEs maintain their cash flow and improve their financial stability by ensuring they are paid on time by their larger business partners.
Can you use a longer payment term with an agreement
According to Article 6:119a of the Dutch Civil Code, the standard payment term for large companies to pay small and medium-sized enterprises (SMEs) is 30 days from the invoice date. If a longer payment term is desired, this must be explicitly agreed by both parties in the agreement itself and cannot be included in the general terms and conditions.
The Civil Code stipulates that a payment term agreed between a large company and an SME may not be manifestly unfair to the creditor (SME).
The term “manifestly unreasonable” generally means that the payment term is so one-sided or unreasonable that it is manifestly unfair.
Not only the payment term must be fair and reasonable, but also other agreed terms, such as what happens if payment is delayed, interest, penalties and so on.
When drafting the agreements, the parties should always take into account the interests and rights of both parties and avoid agreements that are manifestly unfair. In the event of a dispute, the court will consider the circumstances of the case to determine whether or not the payment term is manifestly unreasonable.
Statutory payment term for the government
In the Netherlands, the government, just like other large companies, has a payment term of 30 days, which is laid down in Section 6:119a of the Dutch Civil Code. This means that the government must pay invoices from SMEs within 30 days of the invoice date.
The same principles apply to the government as to private companies to ensure timely payment and fair treatment of small and medium-sized enterprises.
The government is also subject to the rules of the European Union’s Late Payment Directive 2011/7/EU, which aims to ensure that bills are paid on time in commercial transactions between businesses and government agencies. This means that the government must pay SMEs within 60 days of invoice, unless agreed otherwise and is not manifestly unfair to SMEs.
If no payment term has been agreed for an invoice to the government, the standard payment term is 30 days.
What is the maximum payment term for invoices to the government?
The maximum payment term that may be agreed for invoices to the government in the Netherlands is 60 days. This is laid down in the Billing Act. According to this law, a payment term for an invoice to the government may not exceed 60 days, unless other arrangements have been made with regard to the payment process.
Article 6:119b paragraph 5 of the Dutch Civil Code describes it as follows:
5. It is not possible to deviate from a maximum payment day of 30 days, in accordance with the second paragraph, by agreement, unless the parties expressly include a longer term of payment in the agreement and the special nature or characteristics of the agreement make this objective. justify . In that case, the payment term is a maximum of 60 days. ‘
To which government bodies does the statutory payment term apply?
The legal payment term of 30 days applies to all bodies that fall under the Dutch government, such as municipalities, provinces, water boards, central government and semi-government institutions. This also applies to companies that work on behalf of the government.
This rule ( General Government Conditions ) applies to all payments made in the context of a contract, order or delivery of goods or services. This does not apply to loans or investments.
It is important to know that a payment term for an invoice to the government can sometimes vary and can depend on the specific department or organization to which the invoice is addressed. So always verify these terms in advance or if there is any uncertainty. For example, during a tendering procedure, or for specific projects with different regulations than the general regulations.
We summarize the legal payment terms for the different situations below:
- No payment term agreed
A company must pay you within 30 days. This period also applies to the government, as well as to large companies with which you do business.
- Legal maximum payment term
From 1 July 2022, large companies must pay invoices from small and medium-sized enterprises within 30 days.
- Maximum payment term in case of legal exception
A company may take more than 60 days to pay, for the government a maximum term of 30 days applies. Large organizations cannot use this.
Note: you can deviate from the statutory payment term, but only by agreeing on a shorter payment term . A longer payment term is not permitted, even if both you and the client agree to this.
Please note that a number of conditions apply if you want to use the statutory payment term:
- After receipt of the invoice
The statutory payment term starts from the moment the customer receives your invoice. The date of receipt is leading, not the invoice date you state on it.
- Since March 16, 2013
The new statutory payment term for (small) companies and for the government came into effect on March 16, 2013.
- Large companies since July 1, 2018
The statutory payment term for large companies that do business with SMEs and self-employed persons applies from July 1, 2018.
- No 14 days
It is often thought, but there is no legal payment term of 14 days.
With the statutory payment term, the government tries to ensure that you as an entrepreneur can count on your money faster. Both for deliveries to other companies, to large companies and also to the government.
In practice, it is important to make good agreements with the company you supply to. About the payment term and when you send the invoice. So that there is no ambiguity about this, so that you can count on a smooth payment. And is that not possible, not even within the legal payment term? Then we are happy to assist you with our debt collection agency .
Payment term expired, what are the consequences?
If the payment term for an invoice has expired, this can lead to various consequences:
- Collection costs: Section 6:96 paragraph 4 of the Dutch Civil Code : If an invoice is not paid within the payment term, you can charge collection costs. These are costs charged for collecting an outstanding invoice. In accordance with legislation in the Netherlands, these costs may not be unreasonably high and must be included in the invoice or agreed upon in the order.
- Interest: If the invoice has still not been paid, you can charge statutory commercial interest for late payments . This interest is calculated from the moment the payment term has expired until the moment of payment.
- Delivery or operation stops: If payment is delayed, you can decide to suspend delivery or stop work. This is especially true for projects where invoices are sent based on completed work.
It is important to know that these consequences do not apply automatically, you can decide to first consult with the customer, or to make a payment arrangement
Tips for the legal payment term of an invoice?
WhatsApp or e-mail too much and too often with the defaulter, a classic miss!
Instead of sending a formal notice of default , entrepreneurs opt for informal contact via WhatsApp. Understandable, but not effective. Send a written notice of default by post and by e-mail.
Use the correct legal term of payment
Please note! Private customers must be given a minimum of 14 days to pay, which are the legal rules, while business customers may have a shorter period of 5-7 days.
Set a clear (reasonable) final term for business claims.
For business customers it is important to give a reasonable period of 5-7 days after sending a reminder letter. Time limits that are too short are often seen as unreasonable by judges.
Ensure clear communication
A clear invoice, payment reminder , reminder letter and final reminder prevent many problems. Be clear about the term within which payment must be made and make it easy for the debtor to meet his obligations. A direct debit or paying with a Payment service provider (Mollie, Adyen) are good options.
Customers expect an invoice quickly after the delivery of services or products. Do not wait too long to send the invoice, because that can lead to later payments.
Keep the payment term short.
The longer the payment term, the longer it takes to receive your money. Choose a short payment term, such as one week or 14 days, to receive payments faster.
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