What decision-makers and purchasing agents need to know about the new German Act on Prevention of Late Payments.
On 29 July 2014, a new Act on Prevention of Late Payments in business transactions took effect in Germany. For companies this means above all: They cannot agree terms of payment at their own discretion anymore. Those ignoring the new rules or not complying with them run the risk of invalidity of their own term of payment clauses. In this case, extremely short terms of payment may result, possibly endangering a company’s liquidity or even – in extreme cases – its corporate existence. Experience gathered in the first few months after commencement of the Act shows a persistent information and implementation backlog. Below we provide an overview of things to pay attention to and tips on how you can ensure that your agreements are legally watertight. Continue reading