Payment Deadlines
Understanding the principles of deadlines and payment delays helps prevent potential difficulties and optimize the management of your accounts receivable.
1. General Information
- It is first important to distinguish between payment deadlines, which are normally contractual between suppliers and clients, and payment delays (see below).
- In France, inter-company payment deadlines are longer than those of our European partners.
- However, the Modernization of the Economy Law (LME) stipulates that as of January 1, 2009, inter-company payment deadlines are capped at 60 days after the invoice is issued, or 45 days end of the month (Art. 21 of the LME). Except for derogations negotiated at the level of certain professional sectors. See the website PME.service-public.fr.
- Furthermore, the authorities have taken a set of measures to reduce payment deadlines for administrations, public institutions, and local authorities. See the website PME.service-public.fr.
- It should be noted that payment methods vary: cash; payment card, check, transfer, commercial instruments (drafts, promissory notes). Additionally, there are numerous payment terms: cash, end of the month, or end of the month on the 10th or 5th.
2. Pay Attention to the Deadline!
- To calculate the due date, the month of the invoice does not count. Thus, for an invoice issued on March 2, with 30 days end of the month, the due date is April 30, which is 58 days payment period...
- Invoices to be paid 30 days end of the month correspond to an average payment period of 45 days (the month of invoicing is taken as an average of 15 days since the invoices can be issued on the 1st or 30th of the month in question and the following month for 30 days).
3. Pay Attention to the Payment Date!
- Be very precise in the wording of payment terms. For example, we do not speak of "payment in 30 days" but of "payment in 30 days net," "payment in 30 days end of the month," or "payment in 30 days end of the month on the 10th."
Example:
An invoice dated May 8, 2009, will have the following due dates according to the planned payment deadlines:
| Planned Conditions |
Due Date |
Principle Payment Period |
|---|---|---|
| Cash | May 8, 2009 |
0 |
| 30 days net |
June 8, 2009 |
30 days |
| 30 days end of the month 1 |
June 30, 2009 |
53 days (23*+30) |
| 30 days end of the month on 10 |
July 10, 2009 |
63 days (23*+30+10) |
| 60 days net |
July 8, 2009 |
60 days |