Late payments are one of the most disruptive issues for French companies, especially for very small businesses and small and medium-sized enterprises (SMEs). According to the Bank of France, in 2024, businesses experienced an average settlement delay of 13.6 days, which was longer than the European average. Overdue payments can have a detrimental effect on a company’s financial situation, leading to cash shortages, insolvency, or bankruptcy.

To address this, creditors could apply late payment penalties—monetary sanctions permitted by law that serve to discourage past-due bills and compensate creditors for related financial losses.

This article explains late payment penalties in the country, covering the regulatory framework, applicable rates, calculation methods, invoicing to debtor customers, and ways to prevent delays.

What’s in this article?

• Late payments in France
  
• Late payment penalties
  
• Different types of late payment penalties
  
• When do late payment penalties apply?
  
• How are late payment penalties calculated?
  
• How are late payment penalties determined?
  
• What sanctions apply if parties omit charges for delayed settlement?
  
• Must late payment penalties be invoiced?
  
• What options exist when payment is late?
  
• Avoiding late payments
  
• How Stripe Invoicing can help
  

Late payments in France

A charge becomes overdue when an invoice is not paid by the agreed deadline after delivery of a product or service. In France, statutory rules set these settlement timeframes. As of the day after the due date, a delay is automatically noted, with no formal step taken, and penalties are owed immediately.

Payment deadlines in France

Deadlines are prescribed in the 2008 Modernization of the Economy Act law and further addressed in the 2014 Hamon Law and the 2019 PACTE Law (Action Plan for Business Growth and Transformation). These regulations, codified in Articles L441-10 and seq. of the Commercial Code, apply to all business-to-business (B2B) transactions for companies of any size or type and all industries.

If no contractual agreement exists, payment terms are 30 days from the day of delivery of goods or services. However, a contract between the parties might define the deadline as:

• 60 calendar days maximum from the invoice issue date
  
• 45 days from the end of the month from the invoice issue date
  
• 45 days maximum from the invoice issue date for recurring invoices
  
• Less than 30 days, specifically for cash payments when a product or service is delivered
  

Reasons for late payment

Numerous situations could lead to late payments, and it is important to identify them to prevent those delays and target collection strategies:

• Temporary or long-term cash problems for the debtor (decreased activity, customers paying late, seasonal fluctuations)
  
• Ongoing commercial disputes (product quality or quantity, noncompliant service, incomplete delivery)
  
• Internal administrative problems (inefficient quality assurance procedures, lack of planning, misplaced invoices)
  
• Deliberate delays to maximize cash flow, specifically in large companies
  
• Omission or lack of a system for monitoring deadlines
  

Consequences of late payment

Late payments can have serious consequences for both creditors and debtors. For creditors, delays significantly impact cash flow and could lead to the inability to pay suppliers, cover operational costs, or invest in new development projects. They can also lead to a premature need for short-term business loans. In the most severe cases, past-due receivables could trigger insolvency and bankruptcy (in 2024, 25% of commercial bankruptcies were directly related to nonpayments).

For debtors who pay past the deadline, the risks are also consequential. When payments are late, they could incur administrative fines up to €2 million (€4 million for repeat offenders). Authorities might publish the offending party’s name through the General Directorate for Competition Policy, Consumer Affairs and Fraud Protection (DGCCRF) when sanctions apply—a practice known as “name and shame.” For business relationships, payment delays damage trust and affect customer-supplier relationships, which are key to a viable commercial operation.

Late payment penalties

Late payment penalties are automatic monetary sanctions applied when a debtor business does not pay an invoice on the scheduled due date. These fees accrue automatically to each day in arrears for every billing document, starting on the day after the deadline shown on the statement, without any action required by the creditor.

The legal mechanism for late payment penalties was created by the 2001 New Economic Regulations law and further strengthened by the LME, which made these fines between organizations mandatory. The goal of these fees is twofold: to dissuade late-paying customers (and encourage on-time payment) and to compensate creditors for financial losses caused by overdue invoices.

Note: Extra charges for overdue settlement apply exclusively to B2B relationships, not to transactions involving individuals (business-to-consumer, or B2C). Regulators require their inclusion in mandatory billing details and in the general conditions of sale, with sanctions imposed for noncompliance.

Different types of late payment penalties

In France, there are two broad categories of late penalties: legal penalties, applied by default if there is no contractual clause; and contractual penalties, determined by the businesses and noted on invoices and in the sales terms and conditions. There is also a third automatic fee: lump-sum compensation for collection costs.

• Legal penalties
  

The legal late payment penalty rate is equal to the current Central European Bank (CEB) refinancing rate for the half-year period, plus 10 percentage points. Authorities set the rate for the first half of the year on January 1 and set the second-half percentage on July 1.

For instance, as of January 1, 2026, the CEB’s current refinancing rate is 2.15%, and the corresponding late penalty rate is 12.15%.

Note: The applicable percentage is the one in effect at the time the fees become payable, and it remains fixed throughout the overdue period.

• Contractual penalties
  

Businesses can set a custom late payment penalty percentage, provided it is at least three times the legal interest rate. For the first half of 2026, this minimum threshold is 2.62%, resulting in a minimum of 7.86% (3 x 2.62%). No cap applies to charges for delayed settlement, but courts could reduce them if they find them excessive.

A percentage of 12% to 15% for overdue settlement fees generally serves as an effective deterrent and aligns with the CEB’s benchmark.

• Lump-sum compensation for collection
  

A fixed €40 fee automatically applies by default to charges for delayed settlement. It reimburses the party owed for administrative expenses associated with recovery actions (sending dunning letters and engaging a bailiff). Unlike daily fees, the fixed sum is billed once and remains payable after partial settlement of the bill. As with supplementary fees for delays, regulations require their inclusion in the sales terms and conditions and on issued invoices.

When the actual cost of collecting the outstanding balance exceeds the lump-sum compensation amount, the creditor can request further reimbursement upon proof.

Which interest rate applies to charges for delayed settlement?

To set late payment penalties, the Commercial Code recommends applying a percentage based on the CEB benchmark. Still, if a company knows that late payment is a risk, it can use contractual terms to dissuade debtor customers by setting a high rate in the general conditions of sale.

What is the difference between late penalties and late interest?

Fees for overdue settlement and interest are two financial obligations that arise when a bill remains unpaid by its due date. The CEB refinancing base rate plus 10 percentage points determines the fee level; the statutory base percentage set by ministerial decree determines interest.

When do late payment penalties apply?

Late penalties start from the first day after the stated deadline and continue until full payment. The longer the delay, the larger the penalty.

For example, if an invoice is payable on March 31, 2026, and settlement occurs on April 14, 2026, charges for late payment accrue from April 1 through April 14, a period of 14 days. The day funds arrive determines settlement, not the day a payer initiates a transfer.

Please note that the due date depends on what is agreed upon by the two entities involved: a legal deadline of 30 days or a contractual one (less than 30 days for cash payment, 45 or 60 days).

How are late payment penalties calculated?

Charges for overdue settlement follow a simple formula:

Late Penalties = (Invoice Amount inclusive of tax x Rate of Penalty x Number of Days Late) ÷ 365

To illustrate, a supplier sends an invoice for €5,000 pre-tax (with a 20% VAT rate, for €6,000 inclusive of tax). The deadline is February 28, 2026. The customer finally pays on March 30, 2026, 30 days late.

• If the legal rate of 12.15% is used, late penalties are:
  

€6,000 x 12.15% x 30 ÷ 365 = €59.92

• If a contractual rate of 15% is used, late penalties are:
  

€6,000 x 15% x 30 ÷ 365 = €73.97

The fixed €40 fee increases the total. The creditor claims €99.92 (legal rate) or €113.97 (contractual rate) from the client.

How are late payment penalties determined?

Article L441-9 of the Commercial Code specifies that late penalties must appear on every bill issued and on the general conditions of sale. Details about the penalties must be clear and legible on each of these documents.

For example, an invoice could contain the following information:

“Tout retard de paiement donnera lieu, de plein droit et sans mise en demeure préalable, à l’application de pénalités de retard calculées au taux annuel de 15 % sur le montant TTC dû, à compter du lendemain de la date d’échéance. En cas de retard de paiement, une indemnité forfaitaire de 40 € pour frais de recouvrement sera également exigible (art. L.441-10 et D.441-5 du Code de commerce). (Automatically and without advance notice, all late payments will result in the application of late penalties, calculated using the annual rate of 15% on the amount due inclusive of tax, from the day after the due date. If payment is late, a lump-sum compensation fee of €40 for collection will also be due (Art. L.441-10 and D.441-5 of the Commercial Code.)”

What sanctions apply if parties omit charges for delayed settlement?

Failing to note late payment penalties on an invoice and the sales terms and conditions is a violation of the Commercial Code. Article 441-9 sets out sanctions for omitting this information from a bill, while Article 441-16 sets out fines for omitting it from the general conditions of sale.

• Article 441-9 allows for a maximum administrative fine of €75,000 for an individual and a maximum of €375,000 for a legal entity. For repeat infractions within two years, the fine increases to a maximum of €150,000 for an individual and a maximum of €750,000 for a legal entity.
  
• Article 441-16 allows for an administrative fine of €75,000 for an individual and €2 million for a legal entity. Repeat infractions within two years increase the fine to a maximum of €150,000 for an individual and €4 million for a legal entity.
  

Note: Failure to mention late penalties does not annul the right to claim these, and the penalties remain due by rights.

Must late payment penalties be invoiced?

Invoicing late payment penalties is not mandatory because they are automatically owed. However, billing them adds the amount due to the customer’s account. Value-added tax (VAT) does not apply to invoiced late penalties.

In a strong, longstanding business relationship, a creditor might, as a gesture of goodwill, waive or reduce late fees in exchange for prompt payment of the outstanding balance.

What options exist when payment is late?

When a payment is late, the creditor business has several statutory options for settlement: friendly reminder letters, formal notices, an injunction to pay, and legal action. The best option depends on the size of the overdue invoice and the degree of pressure desired.

• Friendly reminder: Friendly reminders, or dunning, are always the first step when a payment is late. By directly contacting the customer or sending a dunning letter, the company can learn more about the reasons for the delayed settlement and resolve the situation quickly.
  
• Formal notice by registered letter: If friendly reminders are not successful, the creditor business must send a formal notice by registered letter, with acknowledgment of receipt. This legal document must indicate the total amount due, the related invoices, the initial due date, the calculation of the late penalty, and the deadline for settling the outstanding payment. It must also explicitly state that failure to settle will trigger legal action.
  
• Injunction to pay: An injunction to pay is a simplified procedure set out in Articles 1405 and seq. of the Code of Civil Procedure. It enables the rapid collection of an outstanding invoice through a court order, without a hearing. When there is an injunction, the debtor has one month to file a dispute; after that, the order is enforceable.
  
• Legal action on the merits: For disputed debts or large amounts, summary proceedings or a legal action on the merits before the court are possible. Legal action allows a creditor to urgently request payment of the principal sum, late penalties, and judicial costs.
  

Avoiding late payments

Proper planning is the best way to avoid late payments. Providing clear settlement terms, promptly sending error-free invoices, and implementing automatic SEPA Direct Debit are solutions that prevent delays.

• Drafting direct general conditions of sale: Drafting clear general conditions of sale signed by the customer before any transactions take place—including certain payment deadlines, clearly defined penalty rates, and mention of the €40 compensation fee—helps avoid most disputes.
  
• Sending invoices quickly: Meeting invoice deadlines, maintaining error-free records, and including all required details to prevent delays caused by administrative issues. For instance, an invoice sent late might be processed in the next payment cycle, increasing the risk of late payment.
  
• Implementing an automated dunning system: Using invoicing software that sends automatic reminders before the deadline and reminders from the first day late minimizes the risk of omission.
  
• Implementing direct SEPA transfers: For repeat customers, SEPA transfers ensure payment on a set date, with no customer action required, simplifying invoice management and reducing late payments.
  
• Applying late penalties: When payments are late, it is important to apply the penalties noted on the invoice or in the general conditions of sale to discipline customers and incentivize commercial partners to respect payment deadlines.
  

How Stripe Invoicing can help

Stripe Invoicing simplifies your accounts receivable (AR) process—from invoice creation to payment collection. Whether you’re managing one-time or recurring billing, Stripe helps businesses get paid faster and streamline operations:

• Automate accounts receivable: Easily create, customize, and send professional invoices—no coding required. Stripe automatically tracks invoice status, sends payment reminders, and processes refunds, helping you stay on top of your cash flow.
  
• Accelerate cash flow: Reduce days sales outstanding (DSO) and get paid faster with integrated global payments, automatic reminders, and AI-powered dunning tools that help you recover more revenue.
  
• Enhance the customer experience: Deliver a modern payment experience with support for 25+ languages, 135+ currencies, and 100+ payment methods. Invoices are easy to access and pay through a self-serve customer portal.
  
• Reduce back-office workload: Generate invoices in minutes and reduce time spent on collections through automatic reminders and a Stripe-hosted invoice payment page.
  
• Integrate with your existing systems: Stripe Invoicing integrates with popular accounting and enterprise resource planning (ERP) software, helping you keep systems in sync and reduce manual data entry.
  

Learn more about how Stripe can simplify your accounts receivable process, or get started today.