Once again increased protection of SME in B2B transactions subject to Belgian law : payment term mandatorily fixed to 60 days for SME’s-creditors

Business, SME, Energy, Banking & Finance

With a law of 28 May 2019, which was recently published on 29 0ctober 2019 the Belgian legislator provides for additional protection of SMEs, besides the recently adopted rules in respect of abuse of economic dependency, unfair contract terms and unfair market practices in B2B relations, which we summarized earlier.

The additional protection concerns payment terms that may be agreed with SMEs when they are creditor in a B2B relation.

In principle in B2B context, parties are free to determine the payment term.

In 2002 a set of non-mandatory rules were enacted in respect of payment terms and late payment interest to cover for the cases where parties would not have contractually regulated these matters.

According to the law of 2 august 2002, each payment in a B2B transaction should, in absence of contractual arrangements on the payment date or the payment term, be done within 30 days following the invoice or the receipt of the goods and services.

It is explicitly stated that parties may agree on a payment term which also may be longer than 60 calendar days.

The law of 28 may 2019 now adds to this provision that parties may not agree on an ultimate payment day exceeding 60 days if the creditor is a small and medium enterprise (SME) and the debtor is not a SME.
For the purpose of this provision a SME is an enterprise which at the time of conclusion of the transaction falls within the criteria set by article 1:24, §1 of the Belgian Company Code, i.e. it should not exceed more than one of the following criteria:
- more than 50 members of personnel;
- yearly turnover (excluding VAT) of 9.000.000 EUR;
- balance sheet total of 4.500.000 EUR

Any clause in an agreement in violation of this rule is to be considered unwritten.

The new rules will apply to any new contracts concluded as of 29 April 2020.

Régine Feltkamp