As of July 1: maximum payment term for large companies to 30 days

The Senate recently approved legislation that will reduce the payment term from large companies to SMEs from 60 to a maximum of 30 days as of July 1, 2022. 99% of suppliers and self-employed persons are SMEs. This makes the legislation relevant to the payment flow between a client, HeadFirst Group and suppliers or self-employed persons.

Why?

Long payment terms from large companies to SMEs affect the cash position and thus the viability of SMEs. With this new legislation, the government wants to put SMEs in a better position.

For whom?

The legislation applies to:

• large companies (clients) that do business with self-employed persons and suppliers of professionals;
• SME entrepreneurs, to which many suppliers belong, that supply professionals to large companies;
• self-employed persons who are hired by large companies;
• labor market service providers that take on a contractual role between clients, suppliers and self-employed persons on the basis of intermediation.

When are you a 'large company'?

• A company is a large company if - for two consecutive years - at least two of these three criteria are met:
• the company has a balance sheet total of more than €20 million
• the company has a net turnover of more than €40 million
• the company employs 250 or more employees

Transition period

The legislation will enter into force on 1 July 2022 for new agreements, as recently approved by the Senate. A transition period of one year applies to existing agreements. This means that a shorter maximum payment term does not apply immediately to current hiring agreements - not even when a current assignment is extended. This transitional period has been set by the government so that market parties - we as the client and labor market service provider - have time to also adapt current agreements to the new legislation. For new hired professionals from July 1, 2022, the maximum payment term of 30 days applies immediately.