On 23 April 2024, the European Parliament adopted its position on a proposed regulation that would have capped all B2B payment terms across the EU at 30 days (EUR-Lex, procedure 2023/0323/COD). A year later, the Council of Member States rejected the text. By early 2026, the file was officially closed — the Parliament’s Legislative Train now marks it as “withdrawn”.
This legislative failure does not mean the issue is resolved for CFOs and CIOs. It simply changes where the pressure comes from: EU-level regulation has been replaced by national-level enforcement, which varies by country and in some cases is becoming significantly stricter. France is the clearest example to date, but the pattern is one that finance and ERP teams across Europe should watch closely.
What Happened to the EU Reform
An Ambitious Proposal, Blocked in Council
In September 2023, the European Commission proposed (COM/2023/533) replacing Directive 2011/7/EU with a directly applicable regulation across all 27 member states. The stated objective: eliminate contractual negotiation on payment terms and impose a maximum of 30 calendar days for all B2B and B2G transactions, with no opt-outs.
The European Parliament softened the text at first reading: allowing negotiated terms of up to 60 days in B2B if expressly agreed in the contract, 120 days for slow-inventory sectors (toys, books, jewellery). A graduated flat-rate penalty was also introduced: €50 for invoices below €1,500, €100 up to €15,000, €150 above that.
The Council of Member States never reached a compromise. The Polish Presidency (first half 2025) made a final attempt, which was rejected. The Danish Presidency confirmed it would not continue the work. The proposal died without a trilogue.
What Still Applies: Directive 2011/7/EU
Directive 2011/7/EU remains the applicable law across the entire European Union. It sets:
- Maximum B2B payment term: 60 calendar days from receipt of the invoice, or delivery of goods and services if later. Parties may agree longer terms “provided it is not grossly unfair to the creditor”.
- Late payment interest: ECB reference rate plus 8 percentage points, applied automatically from the first day of delay.
- Flat-rate compensation: minimum €40 per unpaid invoice, without any prior notice required.
- Transactions with public authorities: 30 days maximum, 60 days in specific cases (healthcare institutions).
These obligations did not disappear when the reform was withdrawn. They remain enforceable. Companies that have not configured their ERP to apply them are already non-compliant.
How One EU Country Is Raising the Bar: France
Stricter National Law Adopted in Early 2026
France provides the clearest current example of national-level escalation. On 19 February 2026, the French Senate unanimously passed a proposal by Senator Olivier Rietmann aimed at “reducing payment delays to tackle business failures.” The text, introduced in October 2025, was subsequently reviewed by the National Assembly.
The context explains the urgency. The Observatory for Payment Delays (Annual report 2024, Banque de France) recorded an average delay of 13.6 days at end-2024 — up one day year-on-year and above the European average. Large enterprises (over 1,000 employees) averaged 18 days late. SMEs and micro-businesses face a collective €15 billion shortfall in working capital due to these delays. Twenty thousand of them face legal proceedings each year related to unpaid invoices.
The Four Key Measures in the Legislation
1. Penalties finally calibrated to company size
The maximum fine had been capped at €2 million since 2008 — a figure that became negligible for large groups with multi-billion revenues. The new ceiling is the greater of €2 million or 1% of global consolidated turnover. For a €10 billion company, the exposure goes from €2 million to €100 million. The compliance calculus changes completely.
2. Repeat offences now tracked over three years instead of two
Penalty doubling for repeat offenders previously applied within a two-year window. This extends to three years, giving regulators greater ability to characterise systematic behaviour.
3. The payment term start date clarified
The payment clock now starts from the invoice issue date, not the receipt date. This closes the door on dilatory tactics around dates (delayed postal delivery, artificially lengthened reception circuits). For ERPs, this requires a review of due-date calculation logic in both supplier and customer modules.
4. Waiver clauses banned in public contracts
Contracts with public buyers frequently included clauses requiring suppliers to waive their late payment interest. Those clauses are now prohibited. Companies working with local authorities, hospitals, or government agencies can — and must — configure their ERP to calculate and apply penalties on public-sector payment delays.
Seven ERP Parameters to Review Now
The diagnostic is not conceptually complex. Execution is the challenge: ERPs are often configured once at installation and payment terms have not been reviewed in years.
1. Payment Terms in Supplier and Customer Master Data
Verify that the payment term codes in your ERP (Net 30, Net 45 EOM, Net 60…) reflect actual contractual reality AND current legal obligations. A “Net 60” code that becomes 70 days in practice due to approval workflows is already non-compliant. With stricter national rules moving the start date to the invoice issue date rather than receipt date, recalibrate accordingly.
ERP action: Audit payment terms in SAP (T-Code OBB8), Dynamics 365 (Payment terms setup), Odoo (payment terms under Configuration > Accounting), Sage X3 (Management > Setup > Payment conditions). Compare theoretical terms against actual payment performance over the past 12 months.
2. Late Payment Interest Rate Configured Correctly
The minimum rate under Directive 2011/7/EU is the ECB reference rate plus 8 percentage points. This is a semi-annual rate that changes each time the ECB publishes its reference rate. For H2 2025, this stood at approximately 8.28%.
ERP action: This rate changes every six months. Create a rate record that is updated semi-annually, or configure an automatic feed from your regulatory reference data. Do not leave a hardcoded figure in a free-text field that has not been touched since 2019.
3. Flat-Rate Recovery Compensation
€40 per invoice, automatically due without any prior notice. In practice, this charge is rarely raised because it is not configured. The result: companies accumulate legally enforceable receivables that they never collect.
ERP action: Verify that the flat-rate charge is activated in your dunning module. It should be triggered automatically at Day +1 of delay, without manual intervention. In Dynamics 365, this is the “Interest fees” configuration under Finance > Accounts receivable. In SAP, the calculation is handled via interest conditions (OBAC / OBBW). In Odoo, the dunning module allows adding flat-rate charges per dunning level.
4. Payment Term Start Date: Issue Date vs Receipt Date
Directive 2011/7/EU generally uses receipt of invoice or delivery of goods as the payment clock start. Where national legislation shifts this to the invoice issue date, your ERP configuration must follow.
ERP action: This requires a change to the “Invoice date” vs “Document date” parameter in due-date calculation. In SAP, check the “Baseline date” configuration (field ZFBDT) in FI/MM. In Dynamics 365, it is the “Invoice date” vs “Document date” setting in payment terms. The technical detail matters: a 5-day offset on 12,000 invoices per year represents 60,000 invoice-days of additional delay in your working capital exposure.
5. Automated Dunning (Automated Payment Reminders)
Interest calculations are worthless if reminders are never sent. A well-configured dunning cycle should send:
- Day -7 before due date: preventive reminder (optional but recommended)
- Day +1: delay notice with applicable interest rate
- Day +15: formal reminder with cumulative interest breakdown
- Day +30: final notice with total penalties outstanding
ERP action: In SAP (FBMP/F150), Dynamics 365 (Collection letters), Odoo (dunning module), Sage (payment follow-up module) — configure these four levels. Tone escalates progressively. Automation is essential: a company issuing 500 invoices per month cannot manage reminders manually.
6. Audit Trail for Regulatory Inspections
Tax and commercial regulators across the EU have powers to inspect payment term compliance and impose fines without court proceedings. With higher penalty ceilings in some countries, a regulatory inspection now represents a first-order financial risk.
ERP action: Your ERP must be able to quickly produce a report showing, for any given period, the invoice issue date, contractual due date, actual payment date, and number of days late. This report must be filterable by counterparty, business unit, and subsidiary. If your IT team needs more than two days to produce this file during an inspection, revisit your transaction logging configuration and analytical views.
7. Real-Time DSO and Overdue Monitoring
Days Sales Outstanding (DSO) is the primary indicator of collection performance. A DSO that drifts from 45 to 52 days means your customers are paying an average of 7 days later than contractually required — and your working capital requirement increases accordingly.
ERP action: Configure a treasury dashboard accessible in real time by the CFO, with configurable alerts (DSO above threshold, doubtful receivables above value, unanswered dunning notices above age). Most modern ERPs include these capabilities natively (SAP S/4HANA Cash Management, Dynamics 365 Finance Cash Flow Forecast, Odoo Treasury). If your ERP is a previous-generation system, a TMS module or BI connector can bridge the gap.
The ERP as an Instrument of Legal Proof
A compliant ERP configuration does not just protect against fines. It protects your position in commercial disputes.
When a client contests late payment interest you have charged them, your ERP must be able to produce an incontestable audit trail: invoice issue date, confirmed receipt date, contractual due date, first day of delay, rate applied, detailed calculation. If this data is not journalised in a non-modifiable format in your ERP, your position is weakened.
The tightened regulatory environment also strengthens the hand of suppliers dealing with public-sector clients. Where public buyers are prohibited from inserting penalty-waiver clauses, companies with government clients now have a reinforced legal basis to charge late payment interest — and their ERP must be ready to do so automatically.
What Comes Next
The French legislation was under examination by the National Assembly in summer 2026. Adoption is expected within months, with entry into force likely in the first half of 2027. ERP teams that wait for royal assent to begin configuration work will be behind schedule: reconfiguring payment terms in a large-enterprise ERP is a 3-to-6-month project at minimum.
At the European level, the withdrawal of the 2023 regulation does not close the debate. The von der Leyen II Commission has included the topic in its roadmap. A new text may be proposed — likely more flexible than the previous one, with greater sectoral flexibility. Meanwhile, mandatory e-invoicing, which is rolling out progressively across EU member states through 2026–2027, will mechanise date traceability for invoices, which will facilitate regulatory audits and create additional pressure on slow payers.
For related reading, see our EU B2B payment regulation ERP configuration guide, our article on reverse factoring as a supply chain finance lever, and our guide on real-time treasury management in ERP.
