Payment Terms Legislation In Kenya

The Prompt Payment Bills of 2020, 2021, and 2022 set a framework for interest on the late payment of invoices by all national and county government entities. Although private entities are mentioned in the 2021 bill the 2022 bill clarifies this is in the context of government procurement. Invoices must be paid on the date agreed or within 90 days of completion or invoice, where no written contract exists. Criminal penalties may also apply in deliberate cases of late payment.

The Kenya Association of Manufacturers, Association of Kenya Suppliers (AKS) and Retail Trade Association of Kenya (RETRAK) signed the Retail Trade Code of Practice to guide Prompt Payment in the Retail Sector, following the recommendation of the State Department for Trade.

The State Department for Trade has recommended future regulation limiting terms to 7 days for fresh food and 30 to 45 days for other suppliers.

The default interest rate for late commercial payments is the base rate set by the Central Bank of Kenya.