Payment terms for companies and private individuals
There are various rules regarding payment terms. As a company, it is important to know which rules apply to which situation. For example, there are different rules regarding payment terms for private individuals, companies and governments. By taking this into account, you will already have a solid basis for optimal credit management.
What is the legal payment term?
A legal term of payment means that there is a certain period of time with an end date by which the payment of an invoice must be made. A legal basis has been established to better protect businesses. If no payment term has been agreed, a legal payment term of thirty days usually applies.
Determining the legal term of payment
It depends on the target group to which you send invoices to determine what the legal payment term is. Target groups can be distinguished into private individuals, small companies, governments and large companies. Based on the target group, the applicable legal payment term or debtor term can be taken into account.
Statutory payment term for private individuals
There is no legal term of payment for private persons or consumers. In this respect, you are free to attach a reasonable deadline to the payment of the invoice. It is important to state the payment term in the general terms and conditions or agreement and, of course, on the invoice.
Statutory payment term governments
The statutory payment term for governments is thirty days after receipt of the invoice. There are some exceptions to this, with the possibility of extending it to sixty days.
Statutory payment term for SMEs and self-employed persons
For SMEs and people who are self-employed, a statutory payment term of up to thirty days applies if no payment term has been agreed. If a term has been agreed, for example, in the general terms and conditions, a maximum of sixty days applies. There is one exception to this. The payment may take longer than sixty days if this has been stipulated in the contract, and the buyer and seller are not adversely affected by this.
Legal term of payment for large companies
In the case of large companies, a maximum payment period of thirty days applies if no agreements have been made. In the case of an agreed payment term, it is not permitted to exceed the sixty-day term. It is, therefore, either thirty days or a maximum of sixty days, depending on the situation.
International payment terms
In the area of international business, the EU has also established rules regarding international payment terms (Directive 2011/7/EU). For example, there is a requirement that B2B invoices must be paid within sixty days. If no payment term has been agreed upon, a debtor term of thirty days applies. There are exceptions to the maximum payment term of sixty days if a longer term has been agreed on the basis of reasonable grounds. Incidentally, in international payment traffic, governments abroad are also required to pay invoices within thirty days.
Not paid on time
It often happens that a debtor lets the payment term slip by without paying. It is then important to take immediate action and send the debtor a reminder. This does not always help, and if the payment is still not made, it is possible to send a friendly reminder.
Getting paid faster
The legal payment terms are not always respected by debtors. It is therefore important to gain insight into outstanding invoices and to take timely action. Payt offers a solution with debtor management software. This not only gives you insight into outstanding invoices, but there are also opportunities for further automation. For example, when it comes to following up invoices with the automatic sending of a reminder and demand for payment.
Payt’s accounts receivable management software optimises the accounts receivable management process in several ways. This ensures faster payments of invoices and, therefore, a better cash flow. Moreover, you save time because the process is automated.
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