B2B statutory payment terms: calculating late payment penalties and interest
A client who pays late costs you more than a simple loss of earnings. French law provides for automatic penalties, due without any need to claim them through formal notice. The problem: very few companies actually apply them, lacking the time to calculate the right amount on every invoice, every six months, for every client.
Here is how the calculation works, what the law requires, and how to automate it so you stop leaving this money on the table.
What the law says about B2B late payments
Article L441-10 of the French Commercial Code governs late payment penalties between professionals. The principle: they are due as of right from the day after the due date, without any reminder or formal notice being required beforehand. The Court of Cassation confirmed this unambiguously (Cass. com. 3 March 2021).
The rate applied corresponds to the higher of two options:
- The ECB refinancing rate increased by 10 percentage points
- Three times the statutory interest rate, which constitutes the mandatory minimum floor
This rate is revised every six months, based on the ECB’s key rate. It is published on Legifrance and can be checked on the Banque de France website. No contractual clause can provide for a rate lower than this legal floor.
The 40€ flat-rate compensation: what you need to know
In addition to penalties calculated pro rata for the days of delay, Article D441-5 of the French Commercial Code provides for a flat-rate compensation of €40 for collection costs, due automatically, without formal notice, from the first day of delay.
Three points that are often misunderstood:
It applies per invoice, not per client: If a client has 5 overdue invoices, that is 5 × €40 = €200 owed, not €40 in total.
It remains due even in the event of partial payment: If the client pays part of the invoice, the €40 compensation applies in full, only the late payment interest is recalculated on the remaining balance.
It can be combined with additional compensation if actual collection costs exceed 40€, but this must then be justified (legal fees, bailiff costs), not simply claimed.
The calculation formula
Late payment penalties and flat-rate compensation are calculated using a simple formula:
Invoice amount including tax × Applicable annual rate × (Number of days overdue / 365) + €40
The day count starts the day after the due date and stops on the date of actual payment. The calculation is based on the amount including tax, not excluding tax, this is settled case law from the Court of Cassation (Cass. com. 7 February 2018).
Illustrative example (using a placeholder rate of 12%, to be adjusted according to the rate actually in force at the time of reading):
An invoice of €5,000 including tax, paid 30 days late:
€5,000 × 12% × (30/365) = €49.32
- €40 flat-rate compensation
= €89.32 claimable
Mandatory disclosures on your invoices and terms of sale
The late payment penalty rate and the €40 flat-rate compensation must appear on every B2B invoice and in the general terms of sale, in accordance with Article L441-9 of the French Commercial Code.
The absence of these disclosures is not a minor oversight without consequence: it exposes the company to an administrative fine of up to €75,000 for an individual and €2 million for a company, doubled in the event of a repeat offence within two years.
A standard wording to include at the bottom of an invoice:
“In the event of late payment, penalties are due as of right, without prior formal notice, at a rate of [ECB rate in force + 10 points]% per year. In accordance with Article D441-5 of the French Commercial Code, a flat-rate compensation of €40 for collection costs is also due.”
Also worth reading: Client follow-up: 10 mistakes that delay your payments
WHAT YOU RISK
Fines of up to €2 million
Missing mandatory disclosures on your B2B invoices can result in an administrative fine of €75,000 for an individual, and up to €2 million for a company, doubled in case of a repeat offence within two years.
Source: Article L441-9 of the French Commercial Code →Why so few companies actually apply these penalties
In theory, these amounts are due automatically. In practice, very few companies claim them. Three reasons come up systematically:
Manual calculation is tedious: Tracking the rate in force, recalculating it every six months, applying the right formula invoice by invoice, for a team managing dozens or hundreds of overdue invoices, this is time nobody has.
Fear of damaging the commercial relationship: Many companies give up claiming these amounts out of fear of upsetting a recurring client, even though the law clearly entitles them to do so.
Lack of a structured process: Without a dedicated tool, these penalties are simply forgotten, nobody calculates them, nobody includes them in the follow-up.
Stop leaving these penalties on the table.
CashNow automatically calculates and applies late payment penalties and the flat-rate compensation fee, on every invoice, without eating up your days.
How CashNow automates the calculation and application of penalties
CashNow integrates the calculation of late payment penalties and flat-rate compensation directly into the follow-up process, without manual intervention.
Automatic calculation, updated with every rate change.:The applicable rate is updated according to official publications, without you having to monitor regulatory changes every six months.
Built directly into follow-ups: The amount owed, invoice, penalties, flat-rate compensation, appears clearly in every follow-up sent, with the calculation breakdown if needed.
No penalty forgotten: Every overdue invoice automatically triggers the correct calculation, without depending on someone’s memory or availability.
Also worth reading: DSO: 5 concrete levers to improve your payment terms
Want to stop leaving this money on the table? Request a personalised CashNow demonstration.
CashNow, a debt collection software solution built for compliance
Beyond penalty calculation, CashNow is a complete debt collection software solution: automated client follow-up, dispute management, DSO and credit risk management. A platform designed to apply the law without eating up your days.
FAQ: Calculating B2B late payment penalties and interest
Is a formal notice required to claim late payment penalties?
No, in B2B relationships penalties are due as of right from the day after the due date, without any reminder or formal notice being required beforehand. This is different in B2C, where formal notice remains mandatory to trigger statutory interest.
Does the €40 compensation apply per client or per invoice?
Per invoice. If a client has multiple overdue invoices, the €40 compensation accumulates for each one, 5 overdue invoices represent €200 in compensation, not €40.
What happens if the client pays part of the invoice?
The €40 flat-rate compensation remains due in full, even in the event of partial payment. Late payment interest, on the other hand, is recalculated only on the remaining unpaid amount.
What does a company risk if it does not include these disclosures on its invoices?
The absence of mandatory disclosures (penalty rate, flat-rate compensation) exposes the company to an administrative fine of up to €75,000 for an individual and €2 million for a company, doubled in the event of a repeat offence within two years.
Written by:
Charles Plasse
Co-founder and Managing Partner of CashNow
Charles Plasse is the co-founder and Managing Partner of CashNow, a FinTech company specializing in accounts receivable management and debt collection. Before founding CashNow in 2013, he worked for several years as a Cash & Working Capital consultant for leading firms, including EY, Deloitte, and Eight Advisory, assisting large corporations. Today, he helps SMEs and mid-sized companies optimize their DSO and structure their collection processes.
