New billing terms for freelancers and businesses
In addition to the start of the new school year, September 1 brings other news. This is because from now on, all self-employed people will be subject to stricter rules when collecting outstanding invoices. We would like to explain to you what is changing and why it is best to take your time as a freelancer or self-employed entrepreneur to make the necessary adjustments.
- What will change for me?
- What to do.
- How much are these maximum interests and damages?
- Does this apply only to new contracts or also to already existing ones?
What will change for me?
For freelancers and companies seeking to claim damages or interest tied to late payments, new ground rules will apply from Sept. 1, 2023.
Do you want to use this clause for defaulters? Then it's best to add the modified reference to interest and damages to your general terms and conditions. You don't have to actually apply it, but at least this way you have the option.
Later in this article, we explain to you how best to handle this and how much the interest or damages may be
What to do.
The good news is that you don't have to change anything by law; the choice is always yours as a business owner. Our advice in this is to read this article anyway, and do consider adjustments because prevention is better than cure.
If you do not take action and you do not amend your terms and conditions or billing terms or do not provide this clause, it is not always guaranteed that you will actually be able to collect your interest or damages. In extreme cases, this can even lead to tax audits and fines.Author's Tip:
Therefore, you do not have to actually apply these interests or damages, but our best tip is to provide the option anyway for "you never know." If you want to have the option of sanctioning late payers, it is important to take the right steps, though, or get guidance from a lawyer or attorney.
How much are these maximum interests and damages?
Certain maximum interest rates
If after sending a first reminder you receive no response from your customer within 14 days, you can take action. You as a business owner can then charge interest and damages for total or partial non-payment if this is correctly stated in the terms and conditions of your sales invoice. The maximum interest you can charge your customers is not fixed. They are linked to a fluctuation and currently amount to 12% in August 2023. If you wish to make use of this clause, you will find the current status on the website of the Finance Department, with all the necessary details ref: interest rate applicable in case of late payment in commercial transactions . If you want to charge your client additional costs you can apply the current interest rate and then calculate the interest using the following example:
Suppose a customer pays a €1,000 invoice as much as 60 days late. At the time of this example, the current annual interest rate is 12%. Then the following calculation follows: (€1,000 x 12% x 60/365). The result of this example is €19.73.
You may only charge this interest 14 days after sending a first payment reminder. However, a small to medium-sized enterprise (SME), which includes sole proprietorships, may start counting interest from the day the payment reminder is sent.
In addition to the interest mentioned above, you can also claim damages. These should not be confused with interest , which are two separate things. So you as a freelancer or company can charge interest and/or damages.
The same rules apply as described above. To be able to charge damages, you must also provide an explicit addition in the terms and conditions of your sales invoice.
If you apply this correctly, you can charge the following compensation for non-payment as of 01/09/2023:
- Outstanding amounts up to €150: max. €20 compensation
- Outstanding amounts between €150.01 and €500: max €30 compensation, plus 10% of the amount above €150.
- Outstanding amounts over €500.01: max €65 reimbursement, plus 5% of the amount over €500, with a total maximum of €2,000.
Does this apply only to new contracts or also to already existing ones?
The new regime will apply to new contracts from Sept. 1, 2023, with a transition period until Dec. 1, 2023, for existing contracts. By then, companies should have adapted their contract terms and general conditions to the new legislation.