Due date: the day an invoice stops being a promise
Payment periods between businesses are not entirely a matter of choice, and the delay has a price fixed by law that almost nobody claims.
The date on which the amount of an invoice becomes payable and from which it starts to generate interest for late payment.
Ley 3/2004, on combating late payment, as currently worded, sets the framework for commercial transactions between businesses:
- In the absence of an agreement, the payment period is 30 calendar days from receipt of the goods or performance of the service.
- The parties can agree longer periods, but with a maximum of 60 calendar days. An agreement for 90 days is void as to the excess.
- For public authorities the 30-day period in the Public Sector Contracts Act applies.
What paying late costs
- Interest for late payment: the rate applied by the European Central Bank to its most recent main refinancing operation plus eight percentage points. The resulting rate is published every six months.
- Compensation for recovery costs: a minimum of €40 per invoice, which the creditor is entitled to receive without having to claim it expressly.
An example with numbers
An invoice for €6,000 due on 15 March and paid on 30 June: 107 days late. If the late payment rate for that half-year were 11%:
- Interest: 6,000 × 11% × 107 ÷ 365 = €193.48
- Plus €40 of recovery costs
Two hundred and thirty-three euros and forty-eight cents that the law recognises and that almost nobody invoices, mostly for fear of losing the client.
The mistake that comes up most
Counting the period from the invoice date. The law counts it from delivery of the goods or performance of the service. Invoice on the 30th something delivered on the 2nd and you have lost twenty-eight days without noticing.
Where this carries on in Cairos: Due dates and forecasting what comes in.
Terms that go with this one
Almost no tax concept makes sense on its own. These three are the ones that most often turn up beside it.
Direct debit
The collection order the creditor presents to their bank so that the amount leaves the debtor's account, backed by a mandate the debtor has signed.
VATCash basis regime
The special regime that delays the chargeable event for VAT until payment is received, and the deduction of input VAT until payment is made.
Payments and bankingBank reconciliation
The process of reconciling the balance on the bank statement with the accounting balance of the current account, identifying every difference.
This, handled without thinking about it
Cairos keeps the invoices, the record books and Hacienda's forms from the same data, so the theory on this page turns into boxes that are already filled in.
No card and no minimum term.