CMS Expert Guide to payment term legislation

The regulation of payment terms applicable to business to business (B2B) relationships is of increasing important for many enterprises.

Over recent years there has been a tendency for many businesses to try to extend the terms on which they pay suppliers. Sometimes periods can extend up to 180 days. For many large enterprises the resulting preservation of cash has proved extremely important. On the other hand, smaller businesses often claim that such payment terms derive from an imbalance of power and are potentially very damaging to their interests.

With this in mind, many national governments have introduced restrictions on maximum payment terms and imposed certain other restrictions. Some even go so far as to require larger companies to report on their payment terms policies.

This guide provides an overview of current payment terms legislation in relation to a large number of countries. It covers specific legislative requirements in respect of payment terms and the ability of parties to extend payment terms beyond standard periods. It also looks at what the possible penalties are for breaches of relevant legislation. In light of the current Covid-19 pandemic, the guide also covers whether there is a special emergency legislation in place.

Please note that this does not purport to be a comprehensive guide to the law. If you require more detailed information about any jurisdiction, please turn to the CMS lawyers who are listed in the country chapters below.