Controlling how long Spanish public authorities take to pay suppliers

Automatic summary, not yet reviewed

1. The law expands the principle of financial sustainability: it is no longer enough to control public financial debt, commercial debt must also be controlled, meaning what public authorities owe their suppliers. Commercial debt is considered sustainable when the average payment period does not exceed the maximum deadline set by the late-payment rules.
2. All public authorities and their related or dependent entities and bodies must publish their average payment period to suppliers and have a treasury plan that includes the forecast of payments to suppliers. If the average payment period exceeds the maximum deadline, they must include in their treasury plan the monthly amount they will devote to payments and the spending cuts or revenue increases needed to bring it down.
3. Automatic measures are created for the Autonomous Communities: if their average payment period exceeds the maximum deadline by more than 30 days for two consecutive months, the Ministry of Finance and Public Administrations issues an alert communication. If the problem persists, spending increases can be blocked, state authorization for long-term borrowing can be required and, as a last resort, resources from the financing systems can be withheld to pay suppliers directly.
4. In local corporations, the audit office (órgano interventorÓrgano interventor The official who internally checks that a local corporation's spending is legal and within budget.) monitors compliance with the average payment period. If it detects delays of more than 30 days beyond the maximum deadline for two consecutive months, it alerts the administration with financial guardianship and the local government board; if the problem continues, resources from the State tax participation can be withheld to pay suppliers.
5. The maximum payment deadline for suppliers is, at the time the law comes into force, thirty days. In addition, a more flexible limit is set on the monthly withholdings or deductions the State can make from the financing system resources of the Autonomous Communities when they fail to meet the average payment period.
6. The law includes other measures: fee exemptions for the Santander 2014 Sailing World Championship, control of public entities not subject to audits, changes to port fees, amendments to the transparency law and to the law on State law enforcement bodies, and import duty relief for provisioning products in the Canary Islands.

Who it affects

• All public authorities and their related or dependent entities and bodies: They must publish their average payment period to suppliers, include payment forecasts in their treasury plans and take action if they exceed the maximum deadline.
• Autonomous Communities: If they pay suppliers late, they can receive alert communications, see their spending blocked, need state authorization to borrow, or have resources withheld to pay suppliers directly.
• Local corporations: Their audit offices monitor the average payment period and, if they pay late persistently, State resources can be withheld to pay their suppliers.
• Suppliers of public authorities: They are the beneficiaries: the law aims to ensure they are paid within the maximum thirty-day deadline.
• Organizers and participants of the Santander 2014 Sailing World Championship: They are exempt from paying certain fees and charges between July 1 and September 30, 2014.

Words worth knowing

Deuda comercial

What public authorities owe their suppliers for goods and services they have not yet paid for.

Periodo medio de pago

The average time a public authority takes to pay its suppliers.

Plan de tesorería

A document planning the money coming in and out of a public authority, including forecast payments to suppliers.

Órgano interventor

The official who internally checks that a local corporation's spending is legal and within budget.

Tutela financiera

The power of an administration (usually the Autonomous Community) to oversee and correct the financial situation of local corporations.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries