As a company, when you send or receive invoices, they will have to be paid within a certain number of days. A statutory payment term applies here. However, many entrepreneurs choose to shorten the payment period of their invoices in order to have the money they need sooner. But how do you actually determine the payment term of invoices? What is and isn’t allowed in this, and in what ways can you shorten it? We cover it in this blog!
How do you determine the payment term of your invoice?
The legal payment term for your invoice depends on a number of factors. First, the type of company you did business with plays a role. Different payment terms apply to small businesses and the self-employed than to large companies. But this is not the only thing. You may also have made certain agreements with the customer or company you sent the invoice to, which can play a role in determining the payment term of your invoices. Based on these two factors, you can determine the invoice payment period and consider reducing it.
The payment period for large entrepreneurs shortened
From 1 July 2022, new rules will apply regarding the payment period of invoices from large entrepreneurs. Since then, invoices sent to them must be paid within a maximum of 30 days. The reason for this change? In the past, many larger companies often used extremely long payment terms of up to 90 days in order to better maintain their cash flow. As this meant that small businesses and self-employed entrepreneurs often waited a long time for their money, they often ended up in financially difficult periods. By reducing the statutory payment period for large companies to a maximum of 30 days, the position of small businesses and the self-employed will be better protected.
Legal payment terms for B2B invoices
To protect entrepreneurs from defaulters, legal payment terms are laid down in the Payment Terms Act. For an invoice between two companies – a so-called B2B invoice – the following legal payment terms are laid down:
- Has no payment term been mutually agreed? Then the B2B invoice must be paid within 30 days.
- Do you mutually agree on a payment term? Then this payment term for a B2B invoice should be a maximum of 60 days.
- In the event that both parties want to agree on a longer payment period than 60 days, this is only possible if it can be shown that this will not have a detrimental effect on either party.
Can you shorten the payment period of invoices?
Despite the fact that the Payment Terms Act attempts to curb defaulters, almost every entrepreneur faces debtors who do not pay their invoices on time. For you as an entrepreneur, this can lead to you having problems paying your fixed expenses but also not being able to make investments in the business. In fact, even when payments within the legal payment period are long overdue, this can lead to financially dire situations for you.
Partly for this reason, many entrepreneurs wonder whether they can also shorten the payment period of their invoices to get paid earlier. The answer: yes. You may shorten the payment term of your invoice, provided it is reasonable and clearly communicated. When a payment term is shortened, a term of 14 days is often chosen. This way, as an entrepreneur – provided the other party complies with the payment term – you are assured of your money sooner, which ensures better cash flow.
Reduce the payment period of your invoices to 24 hours
When you have outstanding invoices, it can be very annoying if you have to wait a long time for your money. Would you like to shorten the payment term of your invoices to about 24 hours and be assured that you will have the value of the invoice in your bank account within this period? This may seem too good to be true, but with Factris factoring, it is indeed possible. How can it be done? Factoring is all about selling invoices. It involves us buying your invoice from you, and then transferring the value of the invoice to you within 24 hours. This way, you are no longer dependent on the customer’s payment term, and you will always have the money you are entitled to at very short notice.
How does Factris factoring work?
Would you like to shorten the payment period of your invoices by factoring with Factris? Fortunately, you can do this with us very easily and quickly. Whether you want to sell one or several invoices to us, with our factoring, you will convert your outstanding ones into working capital for your company in no time and no longer have to deal with the payment period for your invoices. And the great thing is: with invoice factoring, we also directly take over your debtor management from you. This means we make sure that the amount is eventually collected from the customer, so you don’t have to worry about it.