When should the money hit your account? Key payment deadlines in agricultural trade

Have you ever wondered when the money should arrive in your account for the agricultural products you have sold? Payment deadlines can be confusing, especially when dealing with different types of traders and products.

In this post, you’ll find information about key payment deadlines in the trading of agricultural products in Poland.

What are the regulations on payment terms in commercial transactions?

According to Polish law, the basic payment terms in commercial transactions, and therefore also in the case of the purchase of agricultural products, are regulated by the Act on Counteracting Excessive Delays in Commercial Transactions.

According to the aforementioned Law on Prevention of Excessive Delays in Commercial Transactions, all transactions between entrepreneurs, including those involving agricultural products, should be settled within specific and clear payment terms.

The law aims to protect smaller businesses, including agricultural producers, from the practice of prolonged overdue payments by larger business entities.

As a result, agricultural producers can look forward to receiving payment for their products more quickly, which increases their liquidity and stability in the market. The law also introduces the ability to assert one’s rights in the event of payment delays, which is key to maintaining balance and fairness in commercial transactions.

Who is affected by the law?

The law applies to all entrepreneurs. Thus, it applies to farmers, but also to producer groups or intermediaries. It also applies to domestic and foreign transactions, which is important for the development of international trade.

Payment deadlines in commercial transactions for the purchase of agricultural products

The maximum payment terms depend on which entrepreneurs are involved in a given transaction, with the importance of distinguishing entrepreneurs into: micro, small, medium and large entrepreneurs.

Consequently:

• if the supplier is a micro, small or medium entrepreneur, and the buyer is a large entrepreneur, the maximum payment term is 60 days.
• between other entrepreneurs, as a rule, the payment term can be even longer than 60 days, provided that it is clearly agreed between the parties and is not “grossly unfair” to the supplier.

What is the statutory interest for an extended payment period?

Notwithstanding the above-mentioned basic 60-day payment term, one must bear in mind the specific rules on statutory interest for the so-called extended payment term. In practice, this means that even if the parties agree on a payment deadline that falls within the above-mentioned limits (60 days). However, the buyer will still be obliged to pay interest after the expiration of 30 days from the supplier’s performance and delivery of the invoice confirming the delivery of the goods.

Thus, this is interest on a monetary benefit that is not due and for which the purchaser has not fallen into default. Such interest may be calculated up to the date of payment, but not beyond the due date of the monetary benefit.

This is because from the maturity of the benefit, interest for delay in commercial transactions applies.

Referring to the above information, it is worth looking at a specific situation where a payment deadline of 60 days was written in the contract, and the actual payment took place on the 80th day. Then the supplier can charge the recipient in this situation:

• statutory interest for the “extended payment deadline” – from the 31st to the 60th day,
• interest for delay in commercial transactions – from the 61st to the 80th day.

Special laws on trading in agricultural commodities

Notwithstanding the above basic regulation, mention should be made of the Law on Counteracting the Unfair Exploitation of Contractual Advantage in the Trade in Agricultural and Food Commodities dated November 17, 2021 (OJ 2021, item 2262), i.e. dated July 7, 2023 (OJ 2023, item 1773).

This Law applies to suppliers of agri-food products and buyers of agri-food products. “Buyer” means an entrepreneur who directly or indirectly purchases agricultural products, or food products, from a supplier. A “supplier,” on the other hand, is an entrepreneur who manufactures or processes agricultural products, or food products, or sells them to a buyer for a fee.

The law includes examples of situations that qualify as practices that unfairly exploit contractual advantages by buyers of agri-food products from suppliers.

According to Article 8 of this law – practices involving payment after the following deadlines:

1. 30 days for perishable products and,
2. 60 days for other products

can be considered practices that unfairly exploit contractual advantages.

What is a perishable product?

According to the definition, a “perishable product” is an agricultural or food product that, due to its nature or processing stage, may become unfit for sale, or processing within 30 days of its collection, manufacture or processing.

With the above in mind, when determining the deadline for payment, it is important to keep in mind first of all: the type of entrepreneur who participates in the transaction, as well as the type of agricultural product involved in the transaction.

If you have any questions, regarding payment terms or, respectively, interest in commercial transactions, do not hesitate to ask our agri-food specialists. We guarantee that you will receive an answer within 24 hours already.

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