Collecting in France
The payment behaviour of domestic companies is good but could still be improved, as the average Days Sales Outstanding (DSO) payment, (the term we use to explain the likely receipt of payment), does not match the standards outlined in recent regulations transposing EU payment standards into domestic law. However, French courts are fairly efficient in dealing with disputes in a timely manner. The law in France provides for a complete set of restructuring proceedings when a company is facing financial difficulties, however, when liquidation proceedings are opened, the chances of collecting debts are very low.
Availability of financial information
Visibility on company records in France is good and companies must file their balance sheets with the Commercial Courts even though, in practice, some tend to disregard this obligation in order to preserve confidentiality. Proceedings are published in the Registry of the Commercial Courts and in official journals.
Commercial Courts (Tribunal de Commerce) are responsible for dealing with business disputes. This jurisdiction is operated by non-professional judges elected by their peers, and it is efficient in coming to decisions in reasonable time frames.
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Late payment interest
Interest on late payment may be charged to the debtor provided that the applicable interest rate is indicated within the contractual agreement (15% per annum would be acceptable), although the European Central Bank’s interest rate (reconsidered every six months) may be applied automatically if the parties fail to do so.
Beware: failure to mention these legal requirements on invoices will expose the creditor to criminal prosecution and to a fine of up to EUR 75,000 or 50% of the invoice.
In practice, in the amicable phase, interest is collected and negotiated when a payment plan is set up. Otherwise, when the debtor pays the debt, it is very difficult to get them to pay interest. In the legal phase, interest and any other contractual penalty must be asked of the court. French law allows the court, if the debtor’s situation requires it, to postpone or spread the payment over up to two years.
Read the full report to better understand the nature of collecting payments in France. Our export finance experts are happy to help make exporting easier, discuss your ideas and offer finance solutions tailored to your company needs.