Overdue payments between companies are on the rise again!

Since 2020, the year of Covid in which they soared beyond 14 days, overdue payments between companies had been decreasing. Thus, they had decreased on average from 12.4 days at the end of 2021 to 11.7 days at the end of 2022, despite a complicated context (tensions on supplies, high inflation, drastic increase in energy costs) due mainly to the war in Ukraine.

Unfortunately, this trend has not been confirmed in 2023. On the contrary, overdue payment of invoices rose again last year to 12.6 days or even 12.7 days at the end of 2023, according to the Observatory of Payment Terms. The slowdown in activity, the persistence of inflation, geopolitical tensions and recruitment problems may explain it. Leaving aside, on the one hand, the obligation, which now weighs on many companies, to start repaying the state-guaranteed loan they took out during the health crisis, and the stringent and expensive access to bank credit due to the rise in interest rates, on the other hand, are likely to lead companies to postpone the payment of their invoices.

Reminder: Companies must pay their suppliers within a maximum of 60 days from the date the invoice is issued. However, the parties to the contract may agree on a period of 45 days from the date of the invoice at the end of the month.

Of course, small, and medium-size businesses suffer the most from this situation because overdue payments quickly and directly weaken their cash flow. An overdue payment on a large invoice can put a company in great difficulty, or even force it to file for bankruptcy. According to the Observatory of Payment Terms, no less than €15 billion in cash would have been missing from VSEs and SMEs in 2022 due to overdue payments!

Towards a doubling of the fine

To combat this tendency and encourage companies to comply with payment deadlines, the public authorities do not remain idle. They act through the Directorate General for Competition, Consumer Affairs and Fraud Control (DGCCRF(1)), which conducts numerous checks in this area. Thus, in 2023, 766 companies were checked, of which 346 were fined for non-compliance with payment deadlines, i.e., a 19% increase compared to 2022. And by virtue of the famous “name and shame” rule, these penalties are systematically published on a legal announcement medium, which makes it possible to point the finger at bad payers. In this respect, the Minister Delegate for Enterprise recently indicated that she wanted to strengthen controls, particularly for large companies, and double the ceiling of the fine incurred (currently €2 million) by companies that pay late.

In the same vein, as of April 15, 2024, payment terms for local authorities with more than 3,500 inhabitants, and by the end of the year, for all local authorities, will be published on the government’s Open Data website.

(1) Direction Générale de la Concurrence, de la Consommation et de la Répression des Fraudes (DGCCRF).