Payment gridlocks

A payment gridlock refers to a situation in which an undertaking does not receive its receivables from a counterparty within the agreed payment period. The accumulated debt may cascade to subsequent related parties, adversely affecting the liquidity of the entire business environment. Late payments or excessively long payment terms for delivered goods or services hinder business operations.

Payment gridlocks are particularly damaging to micro, small, and medium-sized enterprises (SMEs), contributing to liquidity problems and creating barriers to investment and growth.

The President of the Office of Competition and Consumer Protection (UOKiK) conducts administrative proceedings and imposes fines on entities that are in arrears with payments to their counterparties. Proceedings are initiated ex officio, based on evidence and information obtained by UOKiK. These may stem from notifications submitted by entities suspecting they have fallen victim to late payments.

An excessive payment delay is defined as a situation in which, over a period of three consecutive months, the total value of all financial obligations – either unfulfilled or fulfilled after the due date – by a given entity amounts to at least PLN 2 million. This applies to arrears under invoices issued after 1 January 2020, or earlier if the due date fell after that date.

If these conditions are met, the President of UOKiK imposes a financial penalty on the undertaking. The amount of the fine depends on the size of the debt and the duration of the delay.