Debt collection in Spain: tips for businesses
Payment behaviour of Spanish companies
Here are a few things to bear in mind before doing business with Spanish companies.
According to the Allianz Trade study, Spaniards are among the worst payers in Europe, along with Italy.
- The average DSO in 2021 was 67 days[1].
- The legal payment term for invoices is 30 days.
- 5% of payments made on time (VS 48.3% in France) by the end of 2022.
- Only 3.6% of payments will be more than 90 days late by the end of 2022.
- A payment period of 7 days is usual after a payment reminder has been sent.
Despite this, Spain is rated A1 in the 2024 Allianz rating[2].
This makes it a low-risk country to do business with.
Spain has transposed Directive 2011/7/EC on combating late payment into Law 11/2013.
Legal payment terms are set at 30 days, and parties may contractually agree to a maximum of 60 days.
It should be noted that the Spanish government is attempting to reduce the obvious problems of late payment.
In 2021, for example, the Spanish government announced a new law on late payment.
The regulations include penalties for companies that fail to pay for a transport service within 60 days.
A way of showing that the state is not inactive when it comes to the problem of late payment.
How can I protect myself against non-payment in Spain?
Unpaid debts can represent a major challenge for companies operating in Spain, but there are effective preventive measures and strategies to minimize these risks.
Here are some useful tips on how to protect yourself against overdue payments in the Spanish context:
In-depth customer assessment
Before establishing a business relationship, it’s crucial to carry out a thorough assessment of your potential customers’ financial background.
Check their solvency, payment history and market reputation.
Well-written contracts
Clear, comprehensive contracts are essential to define payment terms, deadlines and penalties for late payment.
Make sure contracts comply with Spanish legislation, and include recovery clauses in the event of non-payment.
Regular monitoring of payments
Establish a rigorous payment tracking system, with automated reminders before due dates.
Proactive monitoring enables you to quickly identify late payments and take preventive action.
Professional collections
In the event of unpaid bills, take swift action to collect them with professionals.
They are familiar with local legal procedures and can take effective action to recover amounts due.
Secure payment methods
Give preference to secure payment methods, such as bank transfers, and avoid cash transactions.
Electronic payments generally provide a digital trail, making it easier to follow up in the event of a dispute.
Why do business with Spanish companies?
Trading with Spain can offer many advantages due to a variety of economic, geographical and cultural factors.
Spanish companies like to work with France because of the quality of its products and its compliance with European standards.
Spain’s geographical position as a gateway to the Maghreb countries makes it a strategic commercial hub.
This facilitates trade with other international markets.
Selling your products to Spanish companies gives you access to a wider market and global visibility. [ 1] https://www.allianz-trade.fr/content/dam/onemarketing/aztrade/allianz-trade_fr/news/200622/2022_06_20_Collection_Complexity_AZT_FINAL.pdf – page 12 [2] https://www.allianz-trade.fr/content/dam/onemarketing/aztrade/allianz-trade_fr/news/310124/Country_Atlas_V3.pdf – page 148 Image by M W from Pixabay