Morocco's New Payment Terms Law: Key Changes and Implications for Businesses

Morocco has enacted a new law focused on payment terms, designed to enhance liquidity and promote healthier financial relationships among businesses. Chronic delays in payments have hindered many companies in Morocco, affecting cash flow, operational efficiency, and overall economic stability. This regulation aims to establish clear and enforceable guidelines to mitigate these issues.

The new Payment Deadline Law (Law 69-21) seeks to streamline commercial transactions and protect smaller businesses from the burdens of overdue invoices. Key provisions of the law include:

• A standard 60-day payment period from the date of the invoice, unless an alternative agreement is made.
• The possibility of extending the payment window up to 120 days if both parties consent.
• A special 180-day payment period may be applicable in certain specific or seasonal sectors.

The law's implementation is phased based on business turnover:

• For businesses with over 50 million MAD, the law has been in effect since July 2023.
• Companies with a turnover between 10 million and 50 million MAD must comply starting January 2024.
• Smaller firms, with revenues between 2 million and 10 million MAD, will be required to comply by January 2025.

Non-compliance will result in fines based on the unpaid amount and the length of delay, with penalties increasing by 0.85% each month.

Implications for Businesses in Morocco

The new law carries significant implications:

• Improved Cash Flow for SMEs: Standardized payment terms will help SMEs manage finances better and facilitate investment in growth.
• Cultural Shift Toward Timely Payments: Enforced late fees and stronger compliance measures aim to cultivate a culture of prompt payments, enhancing trust and stability in supplier-client relationships.
• Potential Compliance Costs: Businesses may need to refine their payment processing and financial tracking systems to meet new requirements and avoid penalties.

IA Insights

While the law is promising, challenges may arise. Companies facing their own liquidity issues may struggle to meet the stricter deadlines, potentially causing a ripple effect of delayed payments. Additionally, regulatory bodies will need adequate resources and authority for effective enforcement.

Morocco's new payment terms law represents a significant move toward resolving long-standing payment challenges within the business community. By implementing standardized deadlines and penalties for late payments, the government strives for a more equitable and transparent business environment. While businesses may face adjustments ahead, these changes could lead to a more stable and efficient economic landscape across the country.

Written by: Maroua Sadouri and sara fraqchi

*This article is informative and is not to be used as legal, economic, or commercial advice.

?Sources: Upsilon Consulting, Indicac.ma, decimal.ma, banqup.ma