In September 2023, the European Commission proposed a regulation to replace Directive 2011/7/EU on late payments. The objective: impose a hard cap of 30 calendar days for B2B transactions across the entire Union, with no contractual opt-out. The text passed its first reading in the European Parliament in April 2024 (EUR-Lex, procedure 2023/0323/COD) and is currently in trilogue negotiations. It is not yet formally adopted at the time of writing, but its direction is clear.
For CFOs and accounts payable managers, the question is not “whether” to prepare, but “which ERP configurations to change” to absorb the impact without operational disruption.
Why Europe is Reforming B2B Payment Terms
The Structural Problem of B2B Payment Delays
Late payments between businesses are among the leading causes of SME insolvency across Europe. When a large corporation imposes 60 or 90-day payment terms on its suppliers, it effectively finances its own working capital at the expense of its supply chain. This mechanism — legal under the old directive — forces SMEs into short-term financing instruments (invoice factoring, overdrafts, early payment discounts) to bridge the cash flow gap.
In the impact assessment accompanying the proposal (COM(2023)533), the European Commission cites late payments as one of the main barriers to SME competitiveness in the single market. Data regularly published by Eurostat and Intrum shows that the effective average payment period across Europe oscillates between 40 and 55 days depending on sector and country — consistently exceeding the 30-day threshold set by the 2011 directive.
From Directive 2011/7/EU to the 2026 Regulation: What Fundamentally Changes
The legal distinction between a directive and a regulation is not an administrative detail — it changes everything about practical scope.
Under Directive 2011/7/EU, each member state had to transpose the text into national law. The result: heterogeneous implementations, varying penalties by country, and sector-specific derogations negotiated locally. While the principle of 30-day maximum payment terms existed, enforcement varied considerably across the EU.
A European regulation is directly applicable across all 27 member states, with no national transposition required. Once adopted, it applies immediately and uniformly. A Polish supplier working with a large French or German group will be subject to the same rules as a local supplier. This is precisely what the Commission aims for: creating a level playing field across the EU single market.
Legislative Timeline and Transitional Periods
The text follows the ordinary legislative procedure (Article 114 TFEU). The European Parliament adopted its first-reading position in April 2024. Trilateral negotiations (trilogue) between the Commission, Parliament, and Council are ongoing through 2025–2026. The text proposes a transitional compliance period for businesses, but contracts signed after the entry into force date must comply with the new rules from day one.
No definitive application date is official yet. But ERP teams that wait for formal adoption before starting work will fall behind: configuration changes in an enterprise ERP system typically require 3 to 6 months of planning.
What the Regulation Requires: Key Points
The 30-Day Cap for B2B Transactions
The proposal eliminates the possibility of contractually negotiating payment terms exceeding 30 calendar days between private businesses. The starting point for the deadline is the invoice receipt date or, where a goods/services verification and acceptance procedure is specified, the date that procedure expires (itself capped at 30 days).
This rule applies to all commercial transactions involving the supply of goods or services between businesses, and between businesses and public authorities when the latter are the debtor.
Automatic Late Payment Interest and Flat-Rate Compensation
The proposed regulation retains and strengthens existing mechanisms:
- Automatic late payment interest: it accrues from the day following the payment deadline expiry, without requiring a formal demand. The proposed rate is the ECB reference rate (or national central bank rate for non-eurozone countries) plus 8 percentage points (COM(2023)533, Article 6).
- Flat-rate compensation: a €50 flat fee per late-paid invoice is automatically due, without requiring any claim from the creditor.
- Non-waivability: contractual clauses excluding or limiting these rights are automatically void.
For a CFO, this means every late invoice generates an immediate, quantifiable financial liability — even in the absence of a formal supplier complaint.
Transparency Obligations for Large Enterprises
Companies exceeding certain thresholds (not yet definitively set in the text) will be required to publish information about their average payment terms. This reporting obligation creates reputational pressure on top of regulatory pressure: a large group publishing average payment terms of 75 days faces commercial and financial consequences well beyond simple penalties.
Sectors with Special Regimes
The regulation recognises sector-specific characteristics. Agri-food, construction, and certain distribution sectors are the subject of ongoing trilogue discussions regarding adapted maximum terms or phased compliance modalities.
ERP Impact: Procure-to-Pay and Order-to-Cash Modules
Configuring Payment Terms in Your ERP
The first workstream is mapping and correcting existing payment terms in the ERP master data.
In virtually all enterprise ERP systems, payment terms are configured at the supplier or customer record level, and can be overridden at the order or contract level. A complete audit involves extracting all active terms and identifying those exceeding 30 days.
Priority cases to address: “60-day end-of-month” terms (which can push the effective period to 75–90 days depending on billing date), “45-day net” terms that remain within current limits but will breach the new rule, and bespoke contracts with negotiated non-standard terms.
Automating Due-Date Alert Workflows
A properly configured ERP must be capable of triggering alerts before the deadline, not just after. On the AP (Accounts Payable) side, the goal is to never let a supplier invoice exceed D+30 without deliberate action. On the AR (Accounts Receivable) side, customer collections must trigger automatically from D+1 of delay, with automatic calculation of statutory interest.
Modern ERP systems allow alert rules to be configured by creditor type, amount, business unit, and legal entity. These rules must be reviewed to reflect the new statutory deadline.
Recalibrating Accounts Receivable and Payable Aging Reports
The aging report (balance of outstanding invoices by age bucket) is the core tool for monitoring payment terms. Standard aging buckets (0–30, 31–60, 61–90, >90 days) often align with thresholds from the old directive. They need recalibration so the critical bucket starts at D+30, and management dashboards include a distinct “regulatory risk invoices” KPI — separate from simple commercial arrears.
This configuration touches AP, AR, and typically treasury dashboard modules.
Activating Automatic Statutory Late Interest Calculation
The ability to automatically calculate late payment interest at the statutory rate (ECB + 8 pp) and the €50 flat fee per invoice is a feature available in major ERP platforms but rarely activated. The regulation’s entry into force makes activation non-optional for companies that want a reliable regulatory compliance dashboard.
ERP Compliance Checklist by Module
Purchasing / AP Module
- Audit all active supplier payment terms (extract the full list, identify those >30 days)
- Configure a “30-DAY NET EU REGULATORY” payment term and set it as default
- Block purchase order entry with non-compliant payment terms
- Activate D-5 payment processing alerts before due date
Sales / AR Module
- Review customer payment terms in the master data
- Configure automatic collections at D+1, D+7, D+15 of delay
- Activate statutory interest calculation on late invoices
- Create a monthly “EU regulatory late invoices” report
Treasury Module
- Model the cash impact of a general shortening of supplier payment terms (if the company was previously a net beneficiary of extended terms)
- Recalibrate cash flow forecasts on a rolling 30-day basis
- Integrate “interest and flat-fee” risk into treasury projections
Reporting Module
- Add DSO (Days Sales Outstanding) and DPO (Days Payable Outstanding) KPIs to management dashboards
- Create an “EU payment terms compliance” dashboard with real-time at-risk invoices
- Document metrics for future mandatory large-company reporting obligations
What Leading ERP Platforms Offer Natively
SAP S/4HANA
SAP S/4HANA manages payment terms via transaction OBB8 (terms configuration). Each term can be defined with a precise net day count. Reports FBL1N (vendor open items) and FBL5N (customer open items) enable arrears analysis by supplier or customer.
For automatic interest calculation, SAP provides the FINT module (interest on arrears calculation) which can be configured with the European statutory rate. Report S_ALR_87012078 produces aging reports with customisable buckets. The 30-day compliance migration is technically straightforward: it requires a master data update campaign for vendor/customer records and revision of default terms.
Microsoft Dynamics 365 Finance
Dynamics 365 Finance configures payment terms in the AP and AR modules via the “Payment terms” menu. Aging period definitions allow custom aging buckets — for example 0–15, 16–30, 31–45, >45 days.
Late payment interest calculation is managed via “Interest codes” and “Interest notes,” a native feature activatable per customer or vendor type. Collection letters can be configured to send automatically based on a schedule tied to due date breach.
Odoo
Odoo manages payment terms via “Payment terms” at partner or order level. The “Automated actions” feature enables email follow-ups or internal activities to trigger at defined dates relative to the due date.
For SMEs on Odoo, adaptation is relatively straightforward: update default payment terms to 30 days and configure the “Follow-up” (collections) module with a D+1 rule. Statutory interest calculation requires a custom development or third-party module in Odoo Community; it is available natively in Odoo Enterprise via “Late payment fees.”
Sage X3 and Sage 300
Sage X3 configures settlement terms in the Administration > Accounting Configuration menu. Each term can include early payment discount tiers and calculated due dates. Late payment interest management is native and configurable by rate and grace period.
Sage 300 (formerly Accpac) offers equivalent functionality via its Accounts Receivable module, with configurable payment terms and arrears tracking. Collection letters are customisable with automatic interest calculation included.
Action Plan for Finance Leaders: 6 Steps Before Entry into Force
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Audit current payment terms: extract from your ERP the full list of active payment terms on both supplier and customer sides. Identify those exceeding 30 days. This report should be produced by the ERP team or an external consultant.
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Map non-compliant contracts: ERP terms only reflect the underlying contracts. For each supplier or customer with terms >30 days, identify the commercial contract in question. Renegotiations take time and must start early.
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Configure new terms in the ERP: create the new 30-day payment terms, test them in a staging environment, and plan the production deployment. Watch for impacts on approval workflows and early payment discount calculations.
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Activate alerts and automated workflows: configure AP and AR alert rules, automatic collections, and interest calculation. Test overrun scenarios on staging data before going live.
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Train AP and AR teams: accounts payable and receivable teams need to understand the new regulation, the new ERP procedures, and exception cases. An internal memo and a 30-minute briefing session are sufficient if the configuration is properly done upstream.
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Establish monthly regulatory reporting: produce a monthly DSO/DPO dashboard and “EU regulatory late invoices” report from now. This report will measure current compliance and justify the company’s position in the event of an audit or supplier complaint.
To go deeper on digital payment flow management and regulatory compliance, see our complete guide on ERP and procure-to-pay purchasing management and our ERP roadmap for e-invoicing mandates. These two workstreams are closely related: e-invoicing makes the starting point of the payment period more precise, which will make compliance with the payment terms regulation easier to verify and enforce.
