Fight against payment blockages
One of the obstacles to running a business smoothly is the untimely settlement of invoices for services and goods. This problem mainly affects medium, small and micro companies, whose contractors do not pay on time. Find out how to fight payment bottlenecks.
In this situation, entrepreneurs have to look for external financing themselves, often incurring significant costs. According to estimates from the 2017 European Payment Report, it is clear that around half of Polish companies are forced to accept long payment terms.
In these circumstances, larger companies finance themselves more cheaply than is possible with bank loans. Their stronger position is thus used at the expense of smaller companies. The Act to Combat Payment Bottlenecks, which came into force on 1 January 2020, is intended to improve the situation of entrepreneurs, but also of the employees employed by them and to strengthen the protection of the weaker party in economic relations vis-à-vis large companies.
Key solutions of the Act include:
- Shortening payment terms to a maximum of 30 days from the date of invoice delivery. This applies to commercial transactions in which the debtor is a public entity. An exception is provided for healthcare entities, which will have 60 days to pay.
- Shortening payment terms to a maximum of 60 days in asymmetric transactions, in which the creditor is a micro, small or medium-sized company and its debtor is a larger contractor, and the contractual provision specifying a longer term will be invalid.
- Increasing the amount of interest due to the entrepreneur in the event of delay in payment by the other party to the commercial transaction. They will be increased from 9.5% to 11.5%, eliminating the problem of financing at the expense of entrepreneurs, as it will be more expensive than obtaining money from commercial loans.
- The catalogue of acts falling within the scope of unfair competition contained in Art. 3 of the Act on the Prohibition of Unfair Competition has been extended to include actions involving the unjustified extension of payment terms for services and goods supplied.
- Exceeding 120 days from the date of invoice or account delivery to the debtor confirming the delivery of goods or services, in terms of payment, entitles the creditor to withdraw from the contract or terminate it.
- Administrative penalties for the biggest debtors. They are imposed by the Office of Competition and Consumer Protection. The President of UOKiK ex officio or at the request assesses whether there has been excessive delay. The values of unpaid invoices and the length of delays are taken into account.
- The right to a tax relief for "bad debts" in PIT and CIT - for companies that do not receive payment on time. This means in practice that the creditor who does not receive the appropriate payment within 90 days from the expiry of the term specified in the concluded contract or invoice will be able to reduce the tax base by a specified amount of the receivable, and the debtor will be obliged to increase the tax base by that amount.
The article was prepared by the Law Office of Arkadiusz Jaskuła, which provides legal services to companies, also providing services for SOTE and our customers: www.adwokat-jaskula.pl
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