Late Payment Directive

Under Article 3 (5) of the directive, the payment period agreed between businesses must not exceed 60 calendar days, unless the contract expressly says otherwise and the longer term is not grossly unfair to the creditor. Article 4 limits public authorities to 30 days, with up to 60 days for certain public undertakings and recognized health care providers. When a buyer pays late, the creditor is owed statutory interest of the reference rate plus at least eight percentage points (Article 2 (6)) and a fixed sum of 40 euros for recovery costs (Article 6). Member states had to apply the rules by March 16, 2013.

Section 271a of the Civil Code (in German) takes over the 60-day rule: a later payment date is valid only if expressly agreed and not grossly unfair to the creditor, and the period usually starts with receipt of the invoice. For public contracting authorities, more than 30 days needs an express agreement and an objective reason, and more than 60 days is void. A review or acceptance period of more than 30 days follows the same test.

Germany goes beyond the minimum on interest. Under section 288 (in German), a business that pays another business late owes nine percentage points above the base rate, one point more than the directive requires, plus a lump sum of 40 euros.

On September 12, 2023, the European Commission proposed a regulation to replace the directive. Its Article 3 (1) would cap payment periods in commercial transactions at 30 calendar days. The proposal needs the approval of the European Parliament and the Council, and until a new act is adopted the directive and the national laws apply.

Because the period usually starts when the invoice is received, the receipt date matters, and the e-invoicing page covers how invoices travel in Germany. A buyer that wants longer terms without squeezing its suppliers can offer supply chain finance, and a supplier that cannot wait can sell its receivables through factoring. The B2B payments page covers the rails the money then takes.

The payment rail decides whether a payment on the last day is late. In Case C-306/06, judged on April 3, 2008, the Court of Justice of the EU held that a bank transfer avoids late payment interest only if the amount is credited to the creditor's account within the payment period. With a standard SEPA credit transfer that means paying a day ahead. An instant transfer, credited within ten seconds at any hour under Regulation (EU) 2024/886, still reaches the account on the due date itself.

Finance Loop is the meeting place for the finance, treasury and payments people who negotiate and run payment terms between businesses. It connects the finance, IT and AI communities in Germany, Austria and Switzerland, with events in Frankfurt, Munich, Berlin and Hamburg.

Finance Loop supports When Banks Say 'No', a half-day payments seminar in Frankfurt for compliance, treasury, finance, export and legal teams on blocked payments, de-risking and sanctions. Finance Loop is also media partner of Capital & Code, a Frankfurt conference whose audience includes corporate treasurers who manage liquidity and risk.

Between businesses, 60 days, unless the parties expressly agree on a longer term that is not grossly unfair to the creditor. Public authorities must pay within 30 days, in some cases 60.

Nine percentage points above the base rate, plus a flat fee of 40 euros for recovery costs, when the debtor is not a consumer.

Not yet. The Commission proposed a regulation with a 30-day limit, but until it is adopted, Directive 2011/7/EU and the national laws that implement it apply.

Yes. Public authorities as buyers must pay within 30 days. Member states may allow up to 60 days for certain public undertakings and health care providers.