Poland amends legislation on payment terms in commercial transactions
Poland has recently amended its legislation regarding repayment obligations in commercial transactions. The amendment takes effect on January 1, 2020, and aims to reduce payment delays by establishing shorter payment deadlines for commercial transactions.
Payment Term Limits
When a public entity (excluding healthcare entities) is the debtor, the payment term cannot surpass 30 days from invoice issuance. In cases where a large company owes a micro-enterprise or medium-sized company, the payment deadline is capped at 60 days from invoice delivery or goods/services receipt. Any contract provisions specifying longer periods are rendered invalid.
Higher Interest Rates Permissible
The amendments establish increased interest rates for late payments and higher compensation for creditors recovering receivables. Creditors are entitled to minimum statutory interest equal to “the reference rate of the National Bank of Poland plus 10 p.p. (approx. 11.5%).” This mechanism discourages companies from using their business partners to finance operations.
Reporting Requirements
Large companies with income exceeding EUR 50 million annually must now have management board members report on payment practices. This transparency requirement helps potential business partners assess the creditworthiness of prospective trade debtors.