B2B Payment Terms in France 2026: LME Rules, Penalties and DGCCRF Fines

Updated 15 May 2026. Written by Samuel Hayot, expert-comptable (chartered accountant) in Paris. Based on the French Commercial Code (art. L441-10 to L441-16) and current DGCCRF enforcement practice.

Late payments cost French businesses an estimated EUR 56 billion per year (to be confirmed against the latest Observatoire des delais de paiement report). For an SME, a DSO (Days Sales Outstanding) above 60 days can turn a profitable year into a cash-flow crisis. Yet most business owners are unaware of the precise legal obligations, the applicable penalty rates, and the risk of a DGCCRF administrative fine that can reach EUR 2 million. This article covers the rules in force and what you need to secure in practice.

In brief: The legal maximum is 60 days from invoice date, or 45 days end-of-month if agreed in your CGV or contract. Late-payment penalties are automatic. The EUR 40 flat recovery fee applies from day one. The DGCCRF can fine up to EUR 2 million. Your CGV must state the rate, conditions and the flat fee.

Current French rules on B2B payment terms result from three successive legislative acts:

• LME Act (loi n° 2008-776 of 4 August 2008): established the 60-day cap and the automatic late-payment penalty regime.
• Sapin 2 Act (loi n° 2016-1691 of 9 December 2016): strengthened administrative sanctions and extended DGCCRF investigative powers.
• PACTE Act (loi n° 2019-486 of 22 May 2019): raised the fine ceiling to EUR 2 million and introduced public naming (name and shame) of sanctioned companies.

These rules are codified in articles L441-10 to L441-16 of the French Commercial Code, as reorganised by ordinance n° 2019-359 of 24 April 2019. Any contractual clause that extends payment terms beyond the statutory caps is deemed unwritten and unenforceable.

Our reading: The "60 days from invoice date" convention is the most common in B2B practice. The "45 days end-of-month" variant can exceed 60 calendar days depending on when the invoice is issued (invoiced on the 2nd of the month: approximately 76 calendar days). The DGCCRF verifies that wording chosen in CGV does not produce an effective term exceeding 60 calendar days — a nuance commercial teams often overlook.

Several sectors face shorter mandatory terms under article L441-11 of the Commercial Code. These are public-order rules — no contractual agreement can extend them.

In the food sector in particular, relationships between large retailers and suppliers are subject to regular DGCCRF investigations.

Article L441-3 of the Commercial Code requires CGV to include:

1. The agreed payment term, within the statutory caps.
2. Settlement conditions: bank transfer, cheque, direct debit, etc.
3. Conditions for applying late-payment penalties, including the applicable rate.
4. The EUR 40 flat recovery fee, automatically due from the debtor.
5. The right to claim a supplementary indemnity if actual recovery costs exceed EUR 40, with documentary evidence.

The underrated risk: CGV silent on penalties do not exempt the debtor — the statutory minimum rate applies regardless. Incomplete CGV deprive the creditor of the ability to set a higher contractual rate, and represent a compliance gap that can weaken the supplier's position in a dispute or DGCCRF inquiry. We regularly encounter CGV predating Sapin 2 (2016) that make no mention of the EUR 40 flat fee.

Automatic Application#

Late-payment penalties run automatically from the day after the due date stated on the invoice, with no prior formal notice required (art. L441-10 al. 2). The creditor may claim them at any time, including by court action.

Applicable Rate#

The penalty rate must appear in the CGV and may not be less than 3 times the French statutory interest rate (taux d'interet legal):

• French statutory interest rate 2025 for professional creditors: 5.07% per annum (Banque de France; to be confirmed for 2026).
• Indicative minimum late-payment rate for 2026: approximately 15.21% per annum (3 x 5.07% — to be verified against the official Banque de France publication).

EUR 40 Flat Recovery Fee#

A EUR 40 flat fee for recovery costs is automatically due from the debtor from the first day of delay (art. D441-5). If actual recovery costs exceed this amount, a supplementary indemnity may be claimed with documentation.

No VAT on Late-Payment Penalties#

Late-payment penalties fall outside the scope of VAT (CGI art. 256, BOFiP doctrine). No VAT is to be invoiced, collected, or declared on the penalty or the EUR 40 flat fee.

In practice: Because individual amounts are often modest, some SMEs do not record these entries systematically. The annual aggregate can be significant, and in a tax audit, unrecorded income may be reclassified as undisclosed revenue.

Article L441-16 of the Commercial Code gives the DGCCRF direct administrative sanction powers:

• Administrative fine: up to EUR 75,000 (natural person), up to EUR 2 million (legal entity).
• Repeat offence within two years: up to EUR 150,000 (natural person) and EUR 4 million (legal entity).
• Publication of the sanction (name and shame): since the Sapin 2 Act, the DGCCRF may publish the sanction decision naming the company.

Sectors regularly targeted include large-scale retail, automotive, construction, and transport. SMEs are investigated both as victims (suppliers to large buyers) and as debtors to their own subcontractors.

The Three-Step Amicable Process#

1. Email reminder: day +1 after due date — factual and courteous.
2. Formalised reminder letter: day +15 — amount, due date, and accruing penalties.
3. Formal notice by registered letter (LRAR): day +30 — recording delay, demanding payment within 8 days, stating the penalty rate and EUR 40 flat fee.

Judicial Options#

The simplified small-claim procedure (available since 2016 for claims up to EUR 5,000 between professionals) is entirely digital and can produce an enforceable title within weeks.

A Paris-based B2B service company generates EUR 1 million in annual revenue. Its average DSO is 75 days, against a standard contractual term of 45 days.

Working capital impact:

• Daily revenue: EUR 1,000,000 / 365 = EUR 2,740/day
• Current debtor balance: EUR 2,740 x 75 = EUR 205,000
• Target balance (45 days): EUR 2,740 x 45 = EUR 123,000
• Excess WCR: EUR 82,000

Financial cost:

• Bank overdraft at 8%: EUR 6,560/year in unnecessary finance charges
• Factoring at 2.5%: EUR 2,050/year

What this means in practice: EUR 82,000 permanently locked in working capital — equivalent to more than two months of payroll for a five-person team. Reducing DSO to 45 days through disciplined collections and compliant CGV has a direct cash-flow impact without any additional revenue.

CGV Audit: verify the payment term (60 days invoice or 45 days end-of-month), penalty rate (>= 3x statutory), EUR 40 flat fee, and settlement conditions. Confirm CGV are communicated before or at the first order. For transport and food businesses, adapt to the applicable mandatory shorter terms.

Monthly monitoring: DSO formula: (Trade receivables incl. VAT / Revenue incl. VAT) x days in period. Also track overdue receivables ratio and average collection time by client segment.

Automating reminders: modern accounting and ERP software can automate reminders at D+1, D+15, and D+30 after due date, standardising treatment across all clients.

When we review SME and mid-market files in Paris, the most frequent issues around payment terms are:

1. Missing or outdated CGV — predating Sapin 2 (2016), with no mention of the EUR 40 flat fee or penalty rate.
2. Incorrectly calculated DSO because credit notes are not properly deducted from the outstanding balance.
3. Late-payment penalties never claimed, when the annual aggregate would represent several thousand euros of legitimate income foregone.
4. Working capital financed by expensive overdrafts when factoring would be cheaper and more predictable.
5. Unidentified DGCCRF risk in SMEs that routinely pay their own suppliers beyond 60 days.

The most underrated point: the risk is not only being the victim of late payment — it is also being its author. An SME routinely paying suppliers at 75 or 80 days is exposed to a DGCCRF investigation and a fine of up to EUR 2 million, regardless of good faith.

• Audit your CGV: payment term, penalty rate (>= 3x statutory), EUR 40 flat fee, settlement conditions
• Calculate your current DSO and compare it to the 60-day statutory cap
• Implement a structured 3-step follow-up process (email, formal letter, registered notice)
• Check your own average supplier payment delay (DGCCRF risk as debtor)
• Record penalties received (account 7711) and penalties paid (account 6312) — no VAT
• Assess whether factoring is appropriate if DSO is structurally above 45 days
• Track DSO monthly as a key treasury KPI
• Brief your commercial and finance teams on applicable rules

For businesses confronted with structurally long payment terms — typically suppliers to large retailers, automotive OEMs, or the public sector — factoring (affacturage) is one of the most effective levers to neutralise the working capital drag. The mechanism is straightforward: the company assigns its trade receivables to a factor (a specialised credit institution), which advances the invoice amount minus a financing fee and a commission. Collection of the receivable on the due date then becomes the factor's responsibility, although several variants exist (with or without credit insurance, with or without recourse against the assignor in case of debtor default).

Three main formulas coexist on the French market:

• Classic factoring (with recourse): the cheapest option, but the assignor remains liable if the debtor ultimately fails to pay. Typical total cost: 1.5% to 3% of receivables, depending on the volume ceded and the credit quality of the portfolio.
• Factoring without recourse: the factor bears the credit risk via an embedded credit-insurance component. Typical cost: 2.5% to 4.5%, justified by the transfer of insolvency risk.
• Confidential factoring (affacturage confidentiel): the assignment is not notified to the debtor, preserving the commercial relationship. The fee is slightly higher because the factor cannot directly collect from the debtor and depends on the assignor to remit funds received.

For a Paris SME with a structural DSO above 60 days and EUR 1 million in annual revenue, factoring typically delivers an immediate cash injection of EUR 150,000 to EUR 200,000 and a measurable reduction in finance costs compared to a permanent overdraft facility. The arbitrage between bank overdraft, Dailly assignment (cession Dailly), and factoring should be modelled annually based on revenue mix, customer concentration, and the credit profile of the portfolio.

International groups operating in France often ask whether the LME framework applies when their French entity invoices a customer based in another EU member state — or vice versa. The general rule is that French law applies when French jurisdiction is competent and when the parties have chosen French law, but the analysis can become complex when the contract is governed by foreign law and disputes are heard in a foreign court.

In practice, three configurations are most common:

For groups headquartered outside France, the practical implication is that French subsidiaries are fully subject to the LME framework regardless of group treasury policy. Centralised payment terms imposed from a parent company headquartered in another jurisdiction will not protect a French subsidiary from a DGCCRF investigation if it pays its French suppliers beyond the 60-day cap. This is a recurring blind spot in cross-border integrations and in post-acquisition treasury reorganisations.

The French LME framework was already aligned in 2008 with what later became Directive 2011/7/EU on combating late payment in commercial transactions. The Directive harmonises minimum standards across the EU: a default 30-day term, the right to charge interest at the European Central Bank refinancing rate plus at least 8 percentage points, and a EUR 40 minimum recovery cost recoverable from the debtor.

France goes beyond the Directive in three respects:

• The 60-day absolute cap (rather than 60 days as a contractual maximum subject to exception) is stricter than the EU floor.
• DGCCRF administrative fines up to EUR 2 million (EUR 4 million on repeat offence) are more dissuasive than the civil remedies foreseen by the Directive in most member states.
• Public publication of sanctions (name and shame) is a French enforcement specificity introduced by Sapin 2.

For international groups operating across several EU jurisdictions, this means that French entities sit at the strict end of the European spectrum. A unified group payment policy of 75 days, perfectly compliant in some neighbouring countries, will systematically expose the French subsidiary to LME breaches and DGCCRF risk. Treasury teams should explicitly carve France out of any group-wide late-payment policy and align the French entity on a strict 60-day pay-when-due principle for its own suppliers.

A structured collections process is not only a treasury question — it is also an internal-control question, particularly for SMEs that wish to be audit-ready or that operate under a statutory audit obligation. The minimum framework we recommend at Hayot Expertise includes:

• Segregation of duties: the person issuing invoices should not be the same person posting cash receipts. This prevents both genuine errors and the rare but documented "lapping" fraud, where customer payments are misappropriated and the gap is concealed by reallocating later payments.
• A documented credit policy: every new customer should be subject to a credit check (Banque de France FIBEN, Altares, Coface or equivalent) before being granted a credit limit. The credit limit must be revisited at least annually, and immediately on any adverse credit signal.
• A monthly collections review: outstanding receivables aged beyond their due date must be reviewed by the finance director (or the chartered accountant in an outsourced setup) and individual recovery actions tracked. A simple aging report (current, 1-30 days overdue, 31-60 days, 61-90 days, 90+ days) is the foundation.
• Provisioning for doubtful debts: receivables overdue more than 90 days without satisfactory recovery progress should trigger a doubtful-debt provision (compte 491). The provision is tax-deductible if the difficulty is documented (formal notice sent, bailiff action initiated, debtor placed in safeguard or insolvency proceedings).

These controls are not theoretical: in our annual review missions, we systematically test the collections process as part of the financial review, because weak collections are the single most common cause of solvency stress in otherwise profitable SMEs.

Recent DGCCRF enforcement activity has focused on three priority areas:

1. Large retail and supermarket chains — historically the heaviest fines, with several published sanctions exceeding EUR 1 million for systemic late payment to perishable-food suppliers.
2. Automotive Tier 1 and Tier 2 subcontractors — DGCCRF investigates upstream pressure on SMEs supplying components to French and European OEMs.
3. Public sector intermediaries and large engineering groups — where extended payment terms cascade down the supply chain, ultimately damaging SME subcontractors several layers below the public contract awardee.

The DGCCRF has also progressively integrated payment-terms compliance into its routine commercial-practices inspections, meaning that an SME contacted for any DGCCRF investigation (consumer protection, B2B unfair practices, advertising claims, etc.) may also find its payment-terms history scrutinised on the same visit. This convergence is a significant 2026 trend: payment-terms compliance is no longer a niche topic and is increasingly part of every administrative interaction with French businesses.

For non-French executives operating French entities, the headline messages are unambiguous:

• France enforces strict statutory caps (60 days from invoice date, or 45 days end-of-month if explicitly agreed) — no derogation, no exception.
• Late-payment penalties and the EUR 40 flat recovery fee apply automatically, with no prior notice. Failure to claim them is foregone income.
• The DGCCRF actively investigates non-compliant debtors — and publishes sanction decisions. Reputational risk for a French entity sanctioned for payment-term breaches is material.
• General terms of sale (CGV) are a regulated legal document — not a marketing flyer. They must include precise mandatory disclosures.
• A structured collections process, with a documented credit policy and a monthly aging review, reduces both treasury risk and audit risk.
• For groups operating in multiple EU jurisdictions, France sits at the strict end of the spectrum. Group treasury policies must be adapted to the French entity, not the other way around.

If you have recently acquired a French entity, integrated a French acquisition target, or set up a French subsidiary, an early review of CGV, collections processes, and supplier payment performance is one of the highest-yield treasury exercises you can perform in the first year of operations.

This article provides general information only. It does not replace a review of your specific situation, your CGV, your balance sheet, and the rules in force at the date of your decision. For an audit of your General Terms and Conditions and your collections process, please contact Cabinet Hayot Expertise in Paris.

Sources: French Commercial Code art. L441-3, L441-10, L441-11, L441-16 (Legifrance) — LME Act n°2008-776 — Sapin 2 Act n°2016-1691 — PACTE Act n°2019-486 — CGI art. 256 — DGCCRF, Observatoire des delais de paiement — Directive 2011/7/EU.