Credit-checking a Spanish customer before offering payment terms

Foreign suppliers often extend their usual payment terms to a new Spanish customer because the first contact went well and the order looks solid. Most of what you need to know about a Spanish company is public, cheap and in Spanish. A Spanish credit check takes an afternoon, and it doesn't work quite like Companies House or a German Handelsregister search.

Know what Spain allows on payment terms

Start with the ceiling. Spain's Law 3/2004 on late payment gives the buyer 30 calendar days from delivery when the contract is silent, and lets the parties agree longer, up to a hard limit of 60 calendar days. A Spanish buyer asking for 90 or 120 days is asking for something the law does not allow. Many still ask, especially in sectors used to long terms.

If your terms of sale are governed by another EU country's law, the EU Late Payment Directive sets similar rules. Either way, put the governing law in writing.

Scale the check to the exposure

Exposure	Checks
Small, paid up front or by card	Tax ID and invoicing details
Medium, 30 days	Tax ID, BORME, insolvency register, warning signs
High or recurring, 60 days	All of the above plus filed annual accounts
Very high	Add a commercial credit report or credit insurance

Remember that a monthly customer can run up three open invoices before the first one falls due.

1. Tax ID and legal name

Ask for the NIF (tax ID) and exact legal name (razón social), not the trading name. The first letter tells you the legal form: B for a limited company (S.L.), A for a public limited company (S.A.). An individual sole trader (autónomo) has a personal tax ID instead. That matters: a sole trader is personally liable for business debts, while an S.L. normally is not. How to validate the number, including in VIES, is in Spanish company NIF: how to validate it.

2. The Companies Register and the BORME

The BORME is the official gazette of the Spanish Companies Register (Registro Mercantil). It is free and searchable, and it is in Spanish. Look for:

• Age. A company incorporated three months ago has no track record.
• Director changes, especially several in a short period.
• Moves of registered office, particularly between provinces.
• Dissolution, liquidation or capital reductions.

For an official extract (nota simple), order one online at registradores.org, the Spanish registrars' portal. If your concern is fraud rather than credit, see how to check a Spanish company exists.

3. Filed annual accounts

Spanish companies must file their accounts with the Companies Register within a month of approving them. Article 281 of the Spanish Companies Act states that anyone may obtain information on the documents filed, so you can order a customer's accounts through registradores.org for a small fee.

You don't need to be an analyst. Three questions:

• Are the accounts filed? Missing recent years is a bad sign. Article 282 blocks further registrations for companies that don't file, and non-filers are often struggling or dormant.
• Is equity (patrimonio neto) negative? Then the company owes more than it owns.
• Do short-term debts far exceed current assets? Then you will be paid when cash allows.

Accounts are one or two years old by the time you read them. Use them for the trend.

4. Insolvency

Search the Registro Público Concursal, Spain's free public insolvency register, and the BORME. Insolvency proceedings (concurso de acreedores) change the rules on what you can collect and how. The portal's information is for public notice only, so confirm anything important with the Companies Register.

5. Warning signs no register will show

• A large first order from an unknown customer who needs it urgently.
• Refusal of any deposit.
• A delivery address that doesn't match the registered office, with no clear reason such as a warehouse or site.
• Only a free email and a mobile number for a five-figure order. Common among Spanish micro-businesses, but worth questions at that size.
• A change of contact or billing email mid-deal.

One sign alone is not a reason to refuse. Two or three together are a reason to ask for security.

Call the company on a number you found yourself, not the one that came with the order, and confirm the person and the deal are real. Call in Spanish if you can; English works less often than foreign suppliers expect, especially with smaller companies.

6. Terms that limit the damage

• A deposit on the first order or on custom work.
• Start small and raise the credit limit after two or three invoices are paid on time.
• A total credit limit per customer, not just per invoice.
• Write it into the quote: payment date, late payment interest, your right to suspend supply when invoices are overdue, and the governing law.
• Credit insurance if you sell on terms to many customers you don't know.

Statutory late payment interest applies even if your contract doesn't mention it: see how to calculate late payment interest in Spain.

If the invoice still goes unpaid

A complete customer record (tax ID, legal name, registered office, director, phone) makes recovery faster. With it you can send a formal demand and, if needed, file a Spanish monitorio payment order, a fast-track court procedure for undisputed debts. The debt collection use case shows how to find a working phone number or email for a debtor company when the one you had stops answering.

This article is for information only and is not legal advice. Laws change: check the current version on the BOE.