Late payment interest between businesses starts running automatically in France from the day after the due date, with no formal notice required. The rate is the European Central Bank’s refinancing rate plus 10 points, and a flat 40 euro recovery indemnity is added per unpaid invoice. The limitation period is five years, and the creditor can choose between an order for payment (injonction de payer), an interim payment order (référé provision) or a full claim on the merits (assignation au fond), depending on whether the debt is disputed, with timelines ranging from three weeks to eighteen months.
A design office (bureau d’études) owed 46,000 euros across a dozen unpaid invoices illustrates the stakes: correctly calculated, the penalty interest and flat indemnities alone can add several thousand euros to the claim, a sum too often abandoned simply because it was never worked out.
Payment terms are not negotiable without limit
Article L. 441-10 of the French Commercial Code sets a default 30-day payment term after delivery of goods or performance of services. A longer term can be agreed by contract, up to a cap of 60 days from the invoice date, or 45 days end of month if expressly stipulated and not manifestly abusive. For periodic invoicing, the cap is 45 days (Article 289 I.3 of the General Tax Code). Article L. 441-11 sets a special 30-day cap for perishable food products (meat, frozen fish, prepared meals, and certain preserves). A contractual term exceeding the applicable cap exposes the debtor to a fine and weakens its position in any dispute.
Penalty interest runs without any reminder
Under Article L. 441-10 II, penalty interest is due without any reminder being necessary, from the day after the payment date shown on the invoice. The rate is the European Central Bank’s most recent refinancing rate plus 10 percentage points (or another rate if agreed, provided it is never below three times the statutory interest rate). The rate is fixed on 1 January for the first half of the year and on 1 July for the second half.
On top of the interest, a flat 40 euro indemnity for recovery costs is automatically due under Article D. 441-5, per unpaid invoice, not per business relationship, so forty overdue invoices already means 1,600 euros. Additional compensation can be claimed on justification if actual recovery costs exceed the flat amount. The one exception is when safeguard, receivership or liquidation proceedings prevent the debtor from paying on time.
The administrative sanction debtors often overlook
Article L. 441-16 provides for an administrative fine of up to 75,000 euros for an individual and 2,000,000 euros for a legal entity, which also covers a failure to state the penalty terms or setting a non-compliant rate. The competent authority is the French administration in charge of competition and consumer affairs (DGCCRF), and Article L. 470-2 sets a three-year limitation period running from the breach.
This changes the negotiating dynamic, since sanction decisions are published: a well-drafted formal notice that mentions this risk often unblocks a situation without any need for litigation.
Formal notice: the document that turns a case around
Strictly speaking, a formal notice (mise en demeure) is not required to trigger the penalties under Article L. 441-10, which apply automatically. It nonetheless remains the key document: it interrupts informal exchanges, fixes the amount claimed (principal, interest and indemnities), starts ordinary-law default interest running on any part of the claim not covered by the special regime, and is the document a judge reads first.
A useful formal notice itemises each amount, attaches the invoices and proof of delivery or performance, cites the applicable statutes, sets a short deadline and clearly states the next steps. A vague letter demanding payment without justification often backfires, since it signals to the debtor that the creditor is hesitant.
Order for payment: the fast track when the debt is not disputable
Article 1405 of the Code of Civil Procedure opens the order-for-payment procedure (injonction de payer) to debts of a contractual or statutory nature for a fixed amount, as well as to obligations arising from bills of exchange. Under Article 1406, the application is made to the president of the commercial court where the dispute falls within its jurisdiction, in the place where the debtor resides, rules that are a matter of public policy.
The appeal is speed and cost: the procedure is non-adversarial, decided on the papers, and an order can be obtained within a few weeks. The point to watch is Article 1416: the debtor has one month after service of the order to file an objection, and if service was not made to the debtor in person, that period only starts running from the first act served on the debtor in person or the first enforcement measure freezing their assets. A seriously disputable debt will turn the order-for-payment procedure into an ordinary lawsuit, wasting several months. This is why the procedure suits documented, uncontested files, not files where the client has already written that they dispute the quality of the work.
Interim payment order: when the obligation is not seriously disputable
Article 873 of the Code of Civil Procedure allows the president of the commercial court to award an interim payment (référé provision) to the creditor where the existence of the obligation is not seriously disputable, and to order performance of an obligation, even one to do something. The procedure is adversarial, so heavier than the order for payment, but it produces an enforceable title that is difficult to neutralise, and it takes place in the debtor’s presence, which often speeds up a settlement.
The decisive question is whether the dispute is a serious one. A debtor who produces, for the first time at the hearing, a complaint email dated to the delivery may be enough to defeat the interim application. Conversely, a dispute that only surfaces after the formal notice, with no earlier trace of it, is rarely found serious. Assessing this point before starting the procedure determines which route to choose.
Claim on the merits, and what to know about limitation
Where the dispute concerns the quality of the work, the scope of the order or a set-off raised by the debtor, a full claim on the merits (assignation au fond) before the commercial court remains the normal route. It takes longer, nine to eighteen months at first instance depending on the court and the complexity, but it settles the whole dispute and allows the creditor to claim, in addition to the principal and interest, damages and an indemnity for irrecoverable costs.
Article L. 110-4 of the Commercial Code sets a five-year limitation period for obligations arising in the course of trade between traders, or between traders and non-traders, subject to shorter special limitation periods. Some of these special periods are one year, notably for supplies necessary for the construction and equipping of ships and for work done, running from acceptance of the work. A creditor who lets a maritime works file sit for eighteen months can therefore lose the claim while believing it was protected by the five-year period.
A debtor in difficulty: act before insolvency proceedings open
The opening of safeguard, receivership or judicial liquidation proceedings halts individual enforcement action and turns the creditor into someone who must file a proof of claim, within two months of publication of the judgment in the BODACC official gazette. It also strips the creditor of the benefit of the penalties and the flat indemnity for the period during which payment was prohibited. An unpaid invoice left to age therefore often turns into a worthless unsecured claim.
The warning signs are well known: unrequested split payments, a change of accounting contact, delays that lengthen invoice after invoice, and Treasury or social security lien filings visible at the commercial court registry. A registry search costs a few euros and is often worth more than a quarter of chasing letters.
Costs, timeline and how the firm helps
For a documented, undisputed unpaid invoice, the sequence of formal notice followed by an order for payment frequently concludes in three to eight weeks, at a cost well below the claim once it exceeds a few thousand euros. For a disputed invoice, an interim payment order takes one to three months, and a claim on the merits nine to eighteen months. In every case, working out the exact penalty interest and flat indemnities adds a sum that is far from symbolic across a portfolio of invoices, and one that is too often left uncounted simply because it was never calculated.
The firm handles the whole chain: a rapid audit of how solid the file is and the risk of a serious dispute, calculation of interest and the flat indemnity, the formal notice, the choice of procedural route, obtaining an enforceable title and enforcement. It also acts in defence, where an order for payment has been served and the one-month objection period is running, a situation in which every day counts.
An unpaid invoice between businesses, an order for payment to challenge, a portfolio of debts to recover? The firm can assess the file and choose the fastest route. Get advice on your unpaid invoice.
Frequently asked questions
Do you need a formal notice for penalty interest to start running?
No. Article L. 441-10 II of the Commercial Code provides that the penalties are due without any reminder being necessary, from the day after the payment date shown on the invoice. A formal notice remains useful to calculate the claim, fix a date and prepare the procedure, but it is not a condition for the right to the penalties.
What rate applies to late payment penalties?
Unless otherwise agreed, the European Central Bank’s most recent refinancing rate plus 10 percentage points, with the rate in force on 1 January applying to the first half of the year and the one from 1 July to the second half. The parties can agree a different rate, provided it is not below three times the statutory interest rate.
Does the 40 euro indemnity apply per invoice?
Yes. Article D. 441-5 of the Commercial Code sets the flat indemnity for recovery costs provided for in Article L. 441-10 II at 40 euros, due for each invoice paid late. If the costs actually incurred are higher, additional compensation can be claimed on justification.
Order for payment or interim payment order?
The order for payment (injonction de payer) is the fastest and least costly route, but it requires a contractual debt of a fixed amount and a debtor who will not dispute it, since they have one month to object after service. The interim payment order (référé provision) under Article 873 of the Code of Civil Procedure is adversarial and a little longer, but it produces a solid title as soon as the obligation is not seriously disputable.
What is the time limit to take action against a client who does not pay?
Five years in principle, under Article L. 110-4 of the Commercial Code for obligations arising in the course of trade. Shorter special limitation periods exist, notably one year for supplies necessary for the construction and equipping of ships and for work done, running from acceptance. The nature of the claim should therefore be checked before relying on the five-year period.