Law on congestion passed by the Parliament.

On the evening of Thursday, 4.07.2019, the Parliament passed the bill on payment congestion. The bill will now go to the Senate. The law is expected to come into force on 1.01.2020. In brief, the most important changes according to the current wording:

1. The deadline for payment in "asymmetric" transactions (the debtor is a large entrepreneur and the creditor is an SME) will not be allowed to exceed 60 days, calculated from the date of delivery of the invoice to the debtor.
2. In other business relationships (no asymmetrical relationship), the term is also not to exceed 60 days, unless the parties agree otherwise and provided that the arrangement is not grossly unfair to the creditor. The latter case involves industries with a longer turnover cycle of product sales (such as furniture). If the parties have stipulated a payment term inconsistent with the wording of the law, then a shorter term applies. Such a situation generates risks for factories, especially when acquiring existing and seemingly unmatured receivables (which in fact may come due) - this includes, for example, tripartite agreements related to the factor's change of factor, as well as with insurers in contracts with assumption of risk on the client's own policy.
3. It also grants the creditor the right to rescind the contract when the payment deadline set in the contract is unduly extended, and the setting of the deadline was grossly unfair to the creditor. This can also interfere with the commercial relationship covered by factoring.
4. A debtor that is a large trader will be required to submit to the other party to a commercial transaction a declaration of its large trader status in the preceding fiscal year - at the latest at the time of entering into the contract.
5. Large entrepreneurs will be required to submit an online report to the Minister of Finance on the applicable payment terms - annually by January 31. Failure to submit the report or submission of a statement inconsistent with the actual state of affairs will be subject to the penalties indicated in the law.
6. Large companies that pay too late are to be punished.... with a monetary administrative penalty. The penalty will be imposed by the President of the Office of Competition and Consumer Protection in an amount calculated according to a formula indicated in the law.
7. A debtor who is a large trader in asymmetric transactions will be required to calculate interest for delay in commercial transactions on its own, taking into account these claims in its own books of accounts.
8. The use of excessively long payment terms in commercial transactions will also be an activity sanctioned in terms of acts of unfair competition, public procurement law and competition and consumer protection.
9. The rate of statutory interest for delay in commercial transactions was increased by 2 percentage points.
10. The amount of compensation for recovery costs has been increased, differentiating the amount: EUR 40 for a benefit up to PLN 5,000, EUR 70 for a benefit from PLN 5001 to PLN 50,000, EUR 100 for a benefit above PLN 50,000.
11. A ban on the transferability of the claim for compensation was introduced explicitly. This change was argued to combat the phenomenon of mass trading in compensation and the assertion of compensation in "bundles." It is too early to assess whether the Courts will allow the transferability of the claim for compensation along with the claim acquired by the factor from the factor to the recipient. However, there is a risk of recognizing the lack of marketability of compensation, even though the assignment of compensation in factoring is inherent in the assignment of the principal receivable, so it is not speculative or profit-making.
12. There will also be a revolution in the so-called bad debt relief. As a rule, a creditor will be able to reduce the tax base by the amount of a receivable that is unpaid and not disposed of within 90 days of the expiration of its due date specified in the contract or invoice (bill).
13. A simplification of the injunction procedure has been proposed - the court is to issue an order for payment on the basis of the contract attached to the lawsuit and proof of service of the invoice on the debtor. In addition, the time limits for issuing warrants and setting hearing dates have been shortened. In addition, the court is to add compensation and interest for delay in commercial transactions to the creditor ex officio (without the need for an application).