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The government wants to reduce late payments by companies

Published on October 08, 2020 - 2 mins reading time
Bank watch
According to the latest annual report from the Observatoire des délais de paiement, late payments by companies averaged 11.5 days at the end of 2019. The government aims to lower this average below 10 days by 2021.

A considerable loss of earnings for companies

If average late payments at the end of 2019 are roughly equivalent to those recorded in 2018, the loss of earnings is still considerable for companies, which may be weakened or even threatened by this lack of cash flow.

For medium-sized companies, late payment represents a loss of earnings of 7 billion euros, while for small and medium-sized businesses, the figure is 19 billion euros.

During the shutdown, late payments did not increase massively, as had been feared. That said, with many companies at a standstill, there were also fewer invoices issued.

The issue of late payment between companies is particularly problematic in France, where payment terms are longer than in neighboring countries.

Government aims to reduce late payments

In an interview with Les Echos newspaper, the French Minister for Small and Medium-sized Enterprises, Alain Griset, expressed his desire to reducethe average late payment to below 10 days by the end of 2021, pointing out that the average delay in the Netherlands is just 4 days, and 7 days in Germany.

Every year, large companies are among the worst payers. As the latest report from the Observatoire des délais de paiement points out, " late payment increases with company size ". However, " some large groups have taken voluntary steps towards their suppliers, particularly SMEs ".

Alain Griset would like to encourage this new awareness: " We need to make large companies understand that it is in their interest to have healthy subcontractors [...] So we need to raise awareness among the management of large companies," he explained to Les Echos.

Another measure that could help reduce payment times is electronic invoicing, which will be mandatory for businesses from 2023. According to the Minister Delegate for SMEs, this will save 3 to 4 days.

However, Alain Griset did not rule out the use of " more restrictive tools in the future ".