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Laws and regulations

Terms of payment in France: consequences of recent regulatory changes

On the occasion of the latest information breakfast organised by the BeautyFULL Club in Paris, Frédéric Manin, lawyer and assistant lecturer, talked about the Law for the modernization of the French economy (August 4, 2008) and how it impacted business to business trade relations, in particular with regard to terms of payment and discriminatory practices.

Frédéric Manin, lawyer at KGA

Frédéric Manin, lawyer at KGA

As far as business to business trade relations are concerned, the shortening of settlement periods is, together with the end of slotting fees, the most important innovation of the recent Law for the modernization of the French economy. “For the first time, a law aims to shorten settlement periods, which used to be very long in France,Frédéric Manin said.

The law provides that the settlement period cannot exceed 45 days from the last day of the month, or 60 calendar days, starting from the date of the invoice. According to Frédéric Manin, this new threshold combines the advantages of transparency and, for the first time, of possible sanction from public authorities. “There are derogatory provisions, but they need a formal agreement within a defined industry, they are submitted to restrictive conditions and can only be temporary,Mr Manin explained.

Furthermore, no “rebate” can be claimed to compensate shortened payment terms subsequent to this new regulatory framework. Such rebates are admissible only when they are applied as to compensate a real commercial service, not the mere application of the law shortening payment terms.

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