Payment Terms Legislation In European Union

The EU Late Payment Directive of 16 Feb 2011 required member states to implement laws by 16 Mar 2013. Maximum payment terms cannot be longer than 60 days unless expressly agreed by both parties and not grossly unfair. Where no terms are specified the default is 30 days. There are exceptions. The term begins from receipt of invoice and verification of invoice cannot exceed 30 days. Enactment by individual states has varied and some have laws that are more favourable to suppliers. (See EU member states for local details). On 12 September 2023 the European Commission released a new proposal for sweeping regulation that includes a strict maximum payment term of 30 days. This proposal still requires agreement by member states and any implementation timeline is currently unknown.

On 30 April 2019 the EU adopted the directive on unfair trading practices in business-to-business relationships in the food supply chain. All member states have implemented the directive into law and the European Commission is undertaking a conformity check. Among other requirements, payment terms are capped at 30 days for perishable goods and 60 days for other agricultural and food products, from the later of delivery date or payment due date. Healthcare, school food schemes, and long-term grape contracts are excluded and five tiers of relative company sizes are set out to which these terms apply. Existing contracts had one year from implementation to comply. A strict enforcement mechanism is also required in each member state with a designated enforcement authority. (See EU member states for local details).

The Supply Chain Initiative (SCI) is a joint initiative launched by several EU level associations with the aim of increasing fairness in commercial relations along the food supply chain.

The Australian government policy RMG 417 requires all non-corporate commonwealth entities with compliant e-invoicing capabilities to pay e-invoices within 5 days and all other other small supplier invoices within 20 days, regardless of the size of invoice.

The Australian Small Business and Family Enterprise Ombudsman has investigated commercial payment terms to SMEs and proposed a 30 day maximum term. No law has yet been proposed, rather reporting requirements have been introduced.