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Statutory accounts: information on deferred payments to suppliers

cuentas-anualesThe Spanish Law 15/2010 [1] established the duty to report the deferrals to suppliers. This obligation was articulated as a tool in the fight against the rampant late payment affecting trading. I think that this was a proposal that has not been very successful in its target, since it seems that no one is ashamed of recognizing that a high percentage of payments have been made after the legal deadline. The fact is more serious when we talk about large and listed companies which should be an example of good practice.

In any case, the ICAC [2], by resolution of December 29, 2010, articulated this duty to report by its inclusion in the statutory annual accounts. Basically it is indicated the information to be provided, together with a table to its presentation. It’s pretty simple and visual.

In these years that we have been reporting this information, there are a couple of aspects that I find interesting to comment by the different interpretation and application that they have had:

  • Consideration of the legal term: The law clearly states that the payment period to suppliers after the transitional period is set to 60 days as a general rule. However, I have read that there are companies which believe that they are paying their suppliers on time in spite of exceeding the legal limit, but adjusting to their payment dates. For example, a company’s terms are 60 days with payment dates the 5th and 20th of each month. Despite exceeding the legal limit when paying, since the payment is adjusted to its payment terms, they consider that the limit hasn’t been exceeded.I believe that this approach is not correct. The Law 15/2010 clearly states that it cannot be used this type of tricks to extend the payment period. Therefore, when reporting, it must be used the legal term of net payment without simulated extensions.
  • Balance of trade creditors to be included: the resolution of ICAC indicates that it should be considered commercial creditors. However, there is no reference whether to make any distinction between domestic and foreign creditors. Keep in mind that Law 15/2010 is of national application, being the adaptation of an EU Directive governing the same terms for the whole Union. I believe that in the financial statements it can be chosen to report only on the deferred payments to national and European suppliers. All other providers are not affected by the rule and therefore there would be no need to report payments made to them. However, it must be decided in each case, taking into account that usually payment periods abroad are shorter than domestic. Maybe, it should be considered to report these payments to foreign suppliers, since they can reduce the average payment period.


[1] Law 15/2010 of July 5 modifies the Law 3/2004 of December 29 through which are established measures to combat late payment in commercial transactions.
[2] ICAC: Accounting and Auditing Institute.

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