Payment delays – how to recover money for an order?

Running a business involves a number of challenges and risks that companies can run into at every step. One of the more serious problems in the transport industry are payment backlogs. At first glance, this issue may seem only a technical aspect of running a business. However, in reality it has a significant impact on a company’s financial liquidity and stability. In this text, we will explain what payment backlogs are and what to do when our contractor is late on payments.

What are payment backlogs?

Simply put, payment backlogs are delays in settling payments owed. These are situations in which contractors do not make payments within the agreed date. The effects of such delays are significant, ranging from problems with the company’s financial liquidity to slowing down the country’s economic growth rate. Due to payment backlogs, transport companies may find it difficult to fulfill their obligations towards suppliers, employees or even the government. According to data from the Office of Competition and Consumer Protection (UOKiK), as much as 78% of companies operating on the Polish market received the due payment 30 days after the deadline, and 13% of them as many as 60 days after the deadline.

Act on payment backlogs

One of the instruments in the fight against unprincipled customers is the Act of March 8, 2013 on counteracting excessive delays in commercial transactions, commonly known as the act on payment backlogs. Also worthy of attention is the amendment of December 2022, which introduced significant changes to 16 applicable legal acts. All this to better protect the interests of creditors. The most important regulations that affect payment backlogs are: 

• shortening the payment deadline in transactions in which the debtor is a public entity to 30 days – without the possibility to extend
• introducing a maximum 60-day payment deadline for transactions in which the creditor is an SME
• imposing administrative fines on companies who are in arrears
• introducing “bad debt relief” in PIT and CIT
• requiring companies to submit reports on adherence to payment deadlines
• simplifying the guarantee procedure
• including actions involving the unjustified extension of payment deadlines in the catalogue of unfair competition acts

Maximum deadline for payment of liabilities

Shortening the payment deadlines for receivables resulting from commercial transactions is one of the most important requirements of the Act on payment backlogs. It is easy to get lost in the applicable regulations, because this matter is regulated in a rather confusing way. Moreover, in recent years, amendments introduced further changes. The maximum payment deadline for liabilities is: 

• 60 days for transactions in which the debtor is a large company (asymmetric)
• 30 days from delivery of the invoice if the debtor is a public entity
• 60 days for public healthcare entities
• 120 days counted from the date of invoice delivery to the debtor, which if exceeded may result in withdrawal from the contract

How to assert your rights?

Companies which struggle with payment backlogs have several paths to claim their rights. In addition to traditional methods such as negotiations or mediation, you can also file a lawsuit. In many cases, a lawyer’s intervention can result in faster settlement of outstanding payments. Especially when attempts to solve the problem amicably did not bring satisfactory results.

Debt collection: the first step to recovering funds

Debt collection companies have experience and proven tools in putting pressure on dishonest contractors. Theoretically, they have the same range of possibilities as the creditor. In reality, however, they are much more effective. The most frequently used debt collection tools include pre-litigation demands for payment, payment reminders, negotiating the method and deadlines for payment, or even more decisive requests for debt repayment.

Assignment of accounts receivable as an alternative solution

The assignment of accounts receivable is nothing more than selling your debt to a company that specializes in debt collection. It is a civil law contract under which receivables are transferred to another entity or natural person. In the vast majority of cases, it does not require the debtor’s consent. If you decide on such a solution, remember to inform the debtor about the transfer of the obligation to another person. Also make sure that this solution has not been excluded in the contract.

The legal route: when other methods fail

If attempts to amicably resolve the dispute and debt collection do not bring results, the only solution is to take the case to court. You can also ask the Office of Competition and Consumer Protection to join the case. The most frequently chosen court path is trying to obtain a payment order in penal order proceedings. This solution allows for quick examination of the case, without the need for a court hearing. All you need to do is submit an appropriate application to the court along with documents confirming that there is a liability towards the company. As a result, the court issues a payment order and your claim can be secured by a bailiff.

How to prevent payment backlogs

You can prevent payment backlogs already when starting cooperation with a contractor. This requires first and foremost discipline as well as establishing clearly defined rules of cooperation. It is worth regularly monitoring payment deadlines and checking opinions about the company before accepting an order from it. The Transport Debtors Register, an online database of companies that do not pay for the transportation of cargo, may be helpful in this matter. It is also worth checking potential contractors in the Register of Public Law Receivables, the National Register of Debtors, or even the National Debt Register.

Payment backlogs summary

Recovering money from debtors is often a difficult and time-consuming process. However, by knowing the available tools and the appropriate strategy, you can significantly increase your chances of quick debt collection. Remember that no one will protect your company’s interests for you. Before starting cooperation with a new contractor, do a background check. Avoid cooperating with companies that are listed in the register of transport debtors to prevent payment backlogs in the future.