Applicable Legislation
The main legislation governing supplier payment periods in Spain is Law 3/2004, of 29 December, which establishes measures to combat late payment in commercial transactions. This law has been amended on several occasions, including Law 15/2010 and, more recently, Law 18/2022, of 28 September, on the creation and growth of companies (‘Crea y Crece Law’), with the aim of reducing payment times and promoting transparency in commercial relations.
According to the current regulations:
- The maximum payment period between companies is 60 calendar days from receipt of the invoice or delivery of the goods or services.
- In the case of contracts with the public administration, the deadline is 30 calendar days.
- Contractual periods longer than 60 days are not permitted in commercial transactions between companies, unless they are expressly agreed and are not abusive for the supplier.
European Legislative Developments and Proposals
- Proposal for a European Late Payment Regulation, Report issued on 25 March 2024: The European Union is considering reducing the maximum payment period from 60 to 30 days for commercial transactions between companies in order to harmonise legislation in all Member States.
Regulation in the Autonomous Communities
Although the Autonomous Communities cannot modify the payment periods established by state legislation, they have implemented measures to ensure compliance with these regulations in their public administrations:
- Publication of the Average Payment Period (PMP): the Autonomous Regions publish their PMP on a monthly basis to ensure transparency and compliance with the legal deadlines. In October 2024, the average PMP stood at 32.08 days, within the legal limit of 30 days for public administrations.
- Supplier payment plans: Some Autonomous Regions have developed specific plans to reduce their commercial debt and comply with legal deadlines, improving the liquidity of their suppliers.
Consequences of non-compliance
Failure to meet these deadlines can have serious consequences for defaulting companies, such as:
- Default interest: the legal default interest rate set by the Bank of Spain is applied, which is added to the amount owed.
- Compensation for collection costs: The law allows the creditor to demand compensation for collection costs incurred.
- Administrative penalties: Since the approval of the Crea y Crece Law, companies that fail to meet payment deadlines may face fines of up to 800,000 euros if they exceed 60 days without justification.
- Reputational impact: Inclusion in lists of defaulting companies can affect the image and credibility of an entity in the eyes of customers, suppliers and investors.
Recommendations for Complying with Payment Deadlines
To avoid legal and financial problems arising from late payment, it is recommended:
- Implement good financial management including payment planning and cash flow control.
- Negotiate reasonable deadlines with suppliers from the beginning of the commercial relationship.
- Automate invoicing and payment processes, avoiding delays due to internal procedures.
- Keep up to date with current regulations to avoid penalties and improve relations with suppliers.
Conclusion
Meeting supplier payment deadlines is not only a legal obligation, but also a key strategy for maintaining a company's financial health and strengthening its reputation in the market. At SF Abogados, we offer legal advice to companies to ensure compliance with payment regulations and avoid penalties for late payment.
If you need specialised advice, do not hesitate to contact our team of experts in commercial law.
