On the French market, and especially for consumer goods, the supplier credit for the payment of the deliveries is the rule (more or less 60 days).

The total amount of those credits are estimated about 600 billion Euros.

The amount of definitively unpaid bills is around several billions Euros.

To avoid unpaid bill there is the necessity to apply some credit management rules.

– Before and on the delivery day you have to respect 3 major commandments

o To have a signed order form with a stamp of the customer on it

o To provide a French solvency check

o To have a signed delivery note with a stamp of the customer on it

– On due date if the bill is still unpaid you have to give a phone call to the debtor without delay

– 30 days after the due date and if the invoice is still unpaid you should transfer the file to a French debt collection office; the worse the solvency check the quickest you should initiate a debt collection process.

– Going legal for debt collection in France is quick and efficient. There is only a problem with the companies going bankrupt during the litigation procedure. But if you studied seriously the solvency check this should not happen.

– At least the major decision is about who are the customer you will deliver. Turnover makes no sense if the payment delays and the costs and efforts to cash in the money provides a negative margin. Financial and sales departments have to find a way to avoid the bad debts and the insolvent customers.

The foreclosure is usually in France about 5 years for commercial debts with some exceptions like the forwarders.

The litigation procedures are easy, more or less cheap and efficient.

Except when the debtor is totally insolvent in nearly all the started litigation procedures the creditor will get his unpaid debt and collect damages.

The only problem is related with

– The order form

– The delivery note

– The term and conditions

– The contracts if they exists

To win a court procedure in France you need those documents in French, signed and with the
commercial stamp on them.

The foreign supplier underestimate the importance of those documents.

Despite it’s the cheapest way to avoid unpaid invoices in France.

Shorter foreclosure periods exists:

1) Foreclosure related to rents, periodic payments and the right to compensation for damages deriving from non-contractual liability is 5 years.

2) Foreclosure for rights deriving from transport and rights that arise from the insurance contract is 1 year.

The law in Italy also foresees the institution of presumptive limitation between 6 months and 3 years. In these cases, with the course of time, it is assumed that the debtor has paid but rebuttal evidence of oath is admitted. However, if the debtor swears he paid, there is no solution. The right of hotelkeepers concerning the accommodation is limited to six months; the right of shop owners to sell goods to those that do not trade them is maximum one year; the right of professionals to their compensation is limited to three years.

The parties CANNOT modify the foreclosure period by mutual agreement.

The foreclosure is interrupted when you submit a request for payment to the debtor by registered mail with acknowledgment of receipt or in using a certified email address. From receipt of such request, a new limitation period begins with equal duration to the original one

If the debtor still don’t pay you can start the judicial phase, if the debt is documented (contract, orders, invoices, delivery note, accounting records, correspondence, etc.). You have to ask to the Court (Justice of the peace up to 5.000 Euros and Court for amounts above) to issue an Order to Pay. Within 30 days the Judge will issue the order and then you have 60 days to notify. After 40 days without opposition the order becomes enforceable.

For debts over 30.000 Euros, you can file for bankruptcy after fruitlessly attempting enforcement against the debtor.

Solvency check: the rule was that every company had to make his balance sheet public. Now a company with less than 51 employees and lees than 8 Mio € turnover can keep his figures hidden. In our point of view this is bad evolution in favour of those not paying their bills on time.

Cheque payment: the validity of a cheque is now reduced from 12 to 6 Months. You have to take care that every French person still signs more or less 37 cheques a year at least 100 times more than the Germans.

Court procedure for unpaid bills: for small amounts it’s now possible to skip a court verdict and to get directly a verdict from a bailiff. The details about this new procedure are not hundred per cent clear.
You face the same evolution in other European countries like Croatia where the public notary is also able to provide a verdict without going to Court.