What does MCT & MEP mean?

What does MCT & MEP mean

Generally for Australian customers the maximum credit terms (MCT) are 60 days from invoice with a maximum extension period (MEP) of 60 days from due date of invoice. This accommodates 30 days end of month terms. If longer terms are required you are required to apply for it with reasons for longer terms.

If maximum credit terms in a policy is 60 days , it means the maximum credit terms you can offer your customer is 60 days. If you do not get paid within the 60 days,  you are able to give your customers an extension of up to 60 days from due date of invoice. The debt only needs to be reported to Atradius if the extension period is breached. You must stop supply at this point as any deliveries made whilst your buyer is in breach of maximum extension period will not be insured.

Whatever your payment terms are on your invoice are the established payment terms with your customer in the event of a claim.  The extension period starts from the due date on the invoice.

For example:
If your invoice states payment is due within 14 days from invoice and your invoice was issued on 2nd July then your due date is 16th July. The maximum extension period starts from 17thJuly.

If your invoice states payment is due 30 days from end of month and you issue the invoice on 2nd July then your due date for payment would be 31st August and MEP would start from 1stSeptember.

The key here is although the policy may allow for maximum credit terms up to 60 days, it is the terms specified on your invoice that’s most relevant in the event of a claim.

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