According to a report in Emprendedores, two-thirds of businesses in Spain struggle to pay their suppliers on time. Understanding payment laws and your customers’ preferences is key to ensuring timely payments and preventing issues.

In this article, we look at how supplier payments work, the main causes of payment delays, and ways to prevent them.

What’s in this article?

• What is the supplier payment law in Spain, and what is it for?
  
• What are the terms for payments to suppliers in Spain?
  
• What methods are there in Spain for paying suppliers?
  
• Most common supplier payment problems in Spain
  
• FAQs about payments to suppliers in Spain
  

What is the supplier payment law in Spain, and what is it for?

Law 3/2004 on Measures to Combat Late Payments in Commercial Transactions was enacted to increase the transparency of payment terms and reduce delays in commercial payments. It also aims to prevent excessive payment terms from providing additional funds to debtors at the expense of creditors.

The amendment of July 5, 2010—known as Law 15/2010—updated the legislation to reflect the current economic situation. It also introduced stricter limits on private agreements to shorten payment terms, particularly to protect small and medium-sized enterprises (SMEs).

What are the terms for payments to suppliers in Spain?

For nonretail businesses (i.e., any business that does not sell directly to customers), the standard payment term for suppliers is 30 calendar days. However, this can be extended to a maximum of 60 days if both parties agree and sign a contract.

Payments to suppliers by municipalities and autonomous communities are governed by Law 11/2013. They differ from payments between private businesses. For example, if a public entity delays a payment, it must pay interest to the supplier on the overdue amount.

Payment terms for suppliers in the retail business also have specific characteristics. They are regulated by Law 7/1996. Although the standard payment term is also 30 days after receipt of the goods, it can vary depending on the type of product.

• 30 days: The general term (unless specifically agreed otherwise) applies to fresh and perishable produce, such as meat, fish, and bread.
  
• 60 days: This term applies to food products not considered fresh or perishable as well as consumer goods, such as bleach, toilet paper, and toothpaste.
  
• 90 days: This is the maximum length of time that can be agreed upon in a contract that includes a compensation payment to the supplier.
  

If the products don’t fall into any of the categories, the general term extends from 30 to 60 days.

Is 90-day payment legal?

A 90-day payment is legal, given that the term is clearly stated in a binding document (e.g., a contract or invoice) the supplier can rely on in the event of nonpayment. If the term is 90 days–120 days, the document must be transferable, meaning its legal effects can be assigned to another legal entity. If the term exceeds 120 days, the supplier can require additional security for payment, such as a bank guarantee.

What happens if the terms of payment to suppliers in Spain are not met?

The business is responsible for paying penalties and interest on any late payments. The penalty system differs based on the type of business. For example, a clothing store would follow the Retail Trade Act, while a courier business would be subject to the Land Transportation Regulation Act.

The current default interest rate is 11.15%. This includes the European Central Bank’s current rates plus the 8% set by law. In addition, as stated in Royal Decree-Law 5/2023, businesses that do not pay on time will not be eligible for public subsidies.

What methods are there in Spain for paying suppliers?

Cash payments are very common in Spain. According to the Bank of Spain, 59% of the Spanish population in 2024 still preferred paying cash for immediate transactions. When paying with cash, the amount is provided at the time of purchase, eliminating any delays in payment.

However, B2B payments can also be made through various methods, such as Single Euro Payments Area (SEPA) transfers, credit and debit cards, or bank receipts. In recent years, online invoicing has become more common, typically offering customers multiple payment options.

Most common problems in payments to suppliers

Payment problems between businesses and their suppliers are quite common in Spain. Here are the most common ones:

Late payments

Although Law 18/2022 requires Spanish businesses to report their average supplier payment terms in their accounting records, delays are still common in Spain. Forbes reports that in the fourth quarter of 2023, Spanish businesses paid suppliers an average of 14.67 days late, exceeding the European average by 2.56 days.

One payment method option

Suppliers often provide only one payment method to their customers. For example, some businesses only provide the International Bank Account Number (IBAN) of their bank account on invoices, requiring customers to make a manual transfer to complete the payment.

To help your customers pay their invoices instantly, it’s important to use a platform that accepts multiple payment options. With Stripe Payments, you can offer your customers over 100 payment options, including methods popular in B2B transactions. For example, SEPA transfers have significantly lower fees than card payments, resulting in significant savings on high-value purchases. Thanks to these payment options, 87% of invoices that include a Stripe payment link are paid within 24 hours.

Lack of transparency

When businesses and suppliers enter into agreements, payment terms are often unclear. To avoid misunderstandings, the due date should be clearly stated in the contract or on invoices.

International payments

Operating a business outside of Spain goes beyond merely attracting customers in a new locale—it also requires you to accept payments easily from these new customers. Choose a payment service provider that will help you handle international payments.

For instance, if you have customers from other EU countries, ensure you can accept international euro transfers and understand any bank fees associated with different types of transfers. Wire transfers are also commonly used for international payments because they’re among the most popular payment methods in the EU. It’s important to know that they’re not geographically restricted and typically involve higher fees.

FAQs about payments to suppliers in Spain

What happens if a supplier is paid before the payment deadline?

Spanish suppliers often offer discounts for early payment, provided this is agreed in advance and clearly stated on the invoice. The discount percentage depends on various factors such as frequency and volume of purchases.

What options exist to pay suppliers when a business faces serious financial challenges?

The best approach is to reach an agreement with the supplier. By clearly communicating the business’s difficult situation, the supplier is likely to agree to be paid in installments.

Can the supplier demand that the business make an advance payment?

Yes. Due to the increase in late payments in Spain—which led the Spanish government to create the National Observatory for Private Defaults—more and more suppliers are now choosing this route. If a supplier asks for payment in advance, value-added tax (VAT) must be applied to the amount paid in advance as soon as the payment is made.