Maintaining a healthy cash flow is one of the essential challenges for French micro-businesses and SMEs. There are several reasons for this: to be profitable, to develop its turnover, to protect itself from the risk of bankruptcy, etc. A manager must therefore ensure that he negotiates reasonable payment terms and, if necessary, resolve unpaid problems. But be careful, the limitation period for a commercial debt must not exceed a certain deadline beyond which the sums due will no longer be recoverable. Explanations.
What is the limitation period for a trade claim?
In the context of a sale or provision of services for which payment has not been honored, the limitation period for a trade debt is the length of time during which it is still possible to obtain a settlement. There are two types of prescription:
– Civil prescription between two individuals or in other words two “non-professionals”
– Commercial prescription between a company and a “non-consumer” or otherwise designated by the term professional, craftsman, trader or professional company
After the limitation period for a commercial claim, the creditor can no longer take legal action to recover his outstanding payment. Going to court to initiate, for example, an order for payment procedure becomes impossible.
Whether you are an individual or a professional, the limitation period for a trade debt will not be the same.
What is the limitation period for a trade debt?
First of all, note that the limitation period for a trade receivable generally begins 30 days after the invoice is issued. If the products sold are perishable goods, this period may be reduced to 20 days. Of course, any company remains free to relax its payment terms by granting, on a commercial basis, payment terms of 60 to 90 days to their customers.
The limitation period is set at 2 years in the case of a transaction with a consumer and at 5 years for sales between professionals. During this period, the creditor can at will “force the payment by way of law” by entering a court. Other limitation periods for trade receivables are applicable depending on the nature of the transaction between professionals, for example: 10 years for condominium fees or even 1 year for invoices related to mobile telephony or Internet.
What to do when the limitation period for a trade debt has passed?
In the case of a transaction involving an individual, no action is possible to recover a debt once the 2-year period has passed. On the other hand, it is still possible to seize a court to settle an unpaid debt between professionals even after the expiry of the 5 years. Once the petition is presented, justice cannot reject it. On the other hand, according to article 2247 of the Civil Code, the debtor can use the limitation period before a court to derail the proceedings. It is in this case, in its right.
After the end of the limitation period for a commercial debt, initiating an amicable recovery procedure is the last resort to try to obtain the settlement of an unpaid debt. It goes without saying, the debtor must be in a good position to accept this step, because nothing obliges it at the legal level.
How to avoid exceeding the limitation period for a trade debt?
Business leaders will have to pay particular attention to monitoring their customers. Depending on the structure of their company, the monitoring of recovery procedures is handled by the manager himself or by his accounting department, or even litigation for large organizations.
Monitoring is done at several levels, already by identifying possible bad payers, then by regularly checking the due dates of invoices and outstanding amounts. Once the bad debts are detected, the appropriate procedures should be put in place: amicable or judicial recovery, within the prescribed commercial debt limitation period.
By treating unpaid bills upstream and as soon as possible, a company ensures that its cash is protected as much as possible in order to always be able to honor its own invoices.
Use a third party to collect trade receivables
Relying on the expertise of a debt collection specialist like Coface saves time and money for companies. From the first stages of a sale, these experts support managers in order to check the solvency of their future clients. In the event of unpaid bills, they take over to manage the procedures and recover the amounts due as quickly as possible. A credit insurance offer also makes it possible to completely protect oneself against unpaid debts with a judicious system of compensation up to 90% of guaranteed debts. With this type of support service, there is no possibility of missing out on a limitation period!