• On 1 January 2020, a series of regulations limiting payment gridlocks will become effective.
• Debtors who are behind with payments towards their contractors still have 100 days to fulfil their financial obligations.
• New regulations will improve financial liquidity of Polish entrepreneurs.

Late payment for services or goods is seen as one of major obstacles to running business. Entrepreneurs who do not receive money are very often unable to pay their contractors and employees. Furthermore, they must seek external financing themselves, thus bearing considerable costs. This situation is about to change on account of the act amending certain acts on reducing payment gridlocks, which will become effective on 1January 2020. The changes are expected to limit payment gridlocks, and consequently – improve financial liquidity of Polish entrepreneurs. The purpose of the Act is to shorten payment deadlines and impose fines on major debtors.

New regulations will definitely improve financial liquidity of entrepreneurs. I mean mainly medium, small and micro-enterprises whom larger contractors do not pay on time. As a result, smaller entrepreneurs often credit business run by tycoons. The Act aiming to end gridlock is good news for entrepreneurs, but also for employees and their families. Limiting payment gridlocks means that it will be easier for enterprises to convert assets into cash, make investments and provide stable conditions to create safe and high-paid jobs, says Tomasz Chróstny, Vice President of UOKiK.

Shorter payment terms

Pursuant to new regulations, payment deadlines in transactions between entrepreneurs or other entities covered by the Act will be shortened. Public institutions will have to fulfil their financial obligations within 30 days. The exception was made for medical entities as they t will have 60 days to pay. In the case of transactions involving micro-, small or medium-sized companies as creditors, and larger contractors as debtors, the payment deadline may not exceed 60 days. The amount of interest that an entrepreneur may demand has also been increased if the other party to a commercial transaction does not pay for goods or services.

There is 100 days are left until 1 January. I encourage entrepreneurs to make good use of this time, make overdue payments and adapt to new regulations preventing payment gridlocks as soon as possible. In the end it will be beneficial to themselves and business environment, says Tomasz Chróstny, Vice President of UOKiK.

Fines for major debtors

From the new year, the largest debtors must bear in mind fines that will be imposed by the Office of Competition and Consumer Protection. UOKiK will be able to react if outstanding payments due to an entrepreneur over the next three months will in total amount to at least PLN 5 million. Such a threshold was set for proceedings initiated until 2021. In later years, actions will be taken if the value of arrears exceeds PLN 2 million.

Proceedings will be initiated ex officio and will have to be completed within 5 months. Anyone will be able to submit a notification of failure to make payment within deadline to UOKiK, not only an entity that has not been paid on time. This person’s data will not be disclosed to the debtor. During the proceedings, the Office will inspect payments from two years preceding their initiation.

Mitigating circumstances and zero tolerance for repeat offenders

The main assumption underlying new regulations is helping entrepreneurs who do not receive their due payment on time. Therefore, UOKiK will not impose fines on entities that fell victims to payment gridlocks. In addition, the Act also provides for smaller fines for entities cooperating with UOKiK. The Office will be able to cut the fine down by 20% if an entrepreneur repays the amount due with interest within 14 days from the delivery of a decision to initiate proceedings. UOKiK will also be able to reduce the fine by further 10% if a debtor immediately pays the fine and waives the right to request the case re-examination. However, if UOKiK finds out that previously fined entrepreneur got behind with its payments again and excessively, the next fine imposed may be increased by 50%.

Cooperation between institutions

New regulations will also provide for close cooperation between state authorities. UOKiK will use the information from the National Tax Administration, which in turn will allow the Office to focus its actions only on entities creating payment gridlocks. When introducing the new Act, UOKiK has been cooperating with the National Tax Administration, the Ministry of Finance and the Ministry of Entrepreneurship and Technology.

Additional information for the media:

UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
Phone +48 695 902 088, +48 22 55 60 246
E-mail: biuroprasowe@uokik.gov.pl
Twitter: @UOKiKgovPL