The Business Creation and Growth Law, better known as the Crea y Crece Law, includes a series of measures and reforms designed to promote business development and boost entrepreneurship in the country. Among them, it stands out its fight against commercial delinquency. If you want to know which are the measures to combat late payment proposed by the Crea y Crece, then this article is for you!
What are the main objectives of the Crea y Crece Law?
The draft of the Crea y Crece Act has its origin in the recovery, transformation and resilience plan with which the Government of Spain is requesting access to Next Generation funding from the EU. Funds aimed at boosting economic recovery after the ravages caused by the COVID-19 crisis.
This Law includes a series of reforms and measures designed to support the evolution and development of businesses and promote entrepreneurship in the country. In that sense, among the objectives pursued by this new Law, we can mention the following:
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The “Crea y Crece” Law and its measures to combat late payments
The fight against commercial delinquency is one of the highlights of the Create and Grow Law. But how does it hope to win the fight? Well, by imposing reporting obligations on companies in order to reduce the risk of non-payment.
The purpose of these obligations is to enable economic operators to have a greater degree of knowledge regarding the payment behavior of all the companies with which they will deal with their suppliers.
In short, companies will be obliged to indicate the average payment period to their suppliers.
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What are the measures proposed by the Crea y Crece Act to combat late payment?
This law against late payment has established a series of measures aimed at reducing the risk of non-payment in commercial transactions by companies.
Below we tell you what these measures are and how they will affect companies:
Information on the financial statements of listed companies
Listed companies have a great responsibility when it comes to reporting their annual accounts, as they are required to report on:
- Its average supplier payment period.
- The monetary volume and number of invoices paid in a period shorter than the maximum period established by the late payment regulations (i.e. 60 days) and the total percentage of the maximum invoices and total monetary payments to suppliers. In addition, this information must be published not only in the report of the Autonomous Regions, but also on the website of the same.
Information on the financial statements of unlisted companies
These are those that do not present abbreviated ACs, i.e., that for at least two consecutive years have complied with two out of three of the following requirements:
- Turnover exceeds 8 M €.
- They have more than 50 employees
- They have asset items in excess of 4 M €.
If it complies with them, it will be required to report the same information as listed companies, including being kept in the CAAC’s annual report. However, it is not required to be published on the web.
It is important to mention that the legislator has not established any sanction for failure to comply with the duty to provide information. However, it has been foreseen that through the creation of the State Observatory of Private Delinquency, the list of companies that fail to comply with the payment terms established by the law on delinquency will be published annually.
The above will apply, of course, if the defaulting company is in the following circumstances:
- If up to December last year, the total amount of unpaid invoices, according to the payment terms of the law on late payment, exceeds 600,000 €.
- The percentage of invoices paid by the company in the period below the maximum period established by the law on late payment is less than 90% of the total invoices.
- Companies that cannot present abbreviated profit and loss accounts. That is to say, companies with assets exceeding 11.4 M €, a turnover exceeding 22.8 M € and with at least 250 employees.
Contracts with the public sector
Another of the measures envisaged to address and combat late payment is focused on the area of public sector contracts. The Public Administrations will be given powers of control and sanction. The purpose of this is to verify that contractors comply with the maximum payment terms in their subcontracting chain.
These are not only contracts with the public sector, but also public subsidies. With the latter, applicants for grants of over €30,000 will be required to provide proof of compliance with the payment deadlines stipulated in the law on late payment.
Mandatory e-invoicing for all professional entrepreneurs and business owners
This is the last of the measures to combat late payments under the Crea y Crece Law. The legislator foresees that this measure will improve the traceability of payments. In this way it will be possible to combat situations of non-payment much better.
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These are the measures to fight against late payment proposed by the new Crea y Crece Law. Are you ready this 2023 to comply with each of them? If you need to be up to date with your tax and accounting obligations of your company, in TAS Consulting we offer you the professional help you need, what are you waiting for to contact us? Write us through our email firstname.lastname@example.org and we will be glad to assist you.
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