Securing Payment: The Payment Guarantees Available in France

Payment guarantees in France: an overview of your options

When you sell to a French company on credit, you carry the risk that the invoice is paid late, paid in part, or never paid at all. The most effective response is not aggressive debt collection after the event but the right payment guarantees agreed in France at the point of contracting. French law offers a broad toolkit: you can take value up front, keep ownership of the goods, obtain a third party's promise to pay, take security over assets, or transfer the risk to an insurer. Each tool has a different cost, a different level of protection, and — critically — a different rank if your buyer enters an insolvency procedure.

The tools fall into three broad families. The first is self-help within the sale itself: asking for an advance payment or deposit, and reserving title to the goods until you are paid. The second is third-party security: a personal guarantee such as a cautionnement, an autonomous guarantee, a documentary credit, or a delegation of payment. The third is security over assets: a pledge over goods (gage) or over receivables (nantissement), or credit insurance that indemnifies you if the buyer defaults. A well-structured deal often combines two or three of these to secure B2B payment in France.

This article is the hub for that toolkit. It sits alongside our guides to the payment methods for B2B in France, the cash payment limits in France, and the risks of cheques and the FNCI register. Choosing a secure payment instrument and choosing a payment guarantee are two sides of the same decision, and the sections below cross-reference the detailed guides in the series.

Advance payment and deposits (acompte and arrhes)

The simplest payment guarantee is to be paid before you perform. A full or partial advance payment removes the credit risk on the sum received and tests the buyer's ability and willingness to pay. French practice distinguishes two forms of down payment, and the label matters. An acompte is a first instalment of the price on a firm sale: it binds both parties, and neither can walk away by forfeiting or refunding it. An arrhes deposit, by contrast, leaves each party a right to withdraw — the buyer loses the deposit if it pulls out, and the seller must return double if it does. For a supplier trying to secure payment, an acompte is usually preferable because it locks the buyer into the deal.

Advance payments are common in manufacturing and bespoke supply, where the seller commits resources before delivery. Staged payments — a deposit on order, a further instalment on shipment, the balance on delivery — spread your exposure across the life of the contract and mean you are never financing the whole order on trust. The general terms and conditions should state clearly which sums are acompte and which, if any, are arrhes, and should tie each instalment to a defined milestone.

One practical point recognised by the French courts: if an advance payment on your invoice is made by a third party rather than by your buyer, that does not mean you have accepted the third party as your new debtor or released the buyer. The buyer remains liable for the balance. Receiving money from someone else is not, by itself, a novation of the debt, so keep your claim against the original buyer alive in your records and correspondence.

Retention of title: the seller's core security

For a seller of goods, the single most valuable payment guarantee in France is a retention-of-title clause (clause de réserve de propriété), governed by Article 2367 of the Civil Code. The clause suspends the transfer of ownership until the buyer has paid the price in full, even though the goods have already been delivered and are in the buyer's possession. Ownership, not merely possession, is your security: if the buyer does not pay, you can reclaim the goods rather than rank as an ordinary unsecured creditor behind the banks and the tax authority.

The clause comes into its own in insolvency. Where the buyer is placed in a French insolvency procedure (sauvegarde, redressement or liquidation judiciaire), a seller who reserved title can bring an action to reclaim the goods (action en revendication), provided the goods still exist in kind and are identifiable in the buyer's stock. French courts have upheld this right even against a bank that had discounted bills of exchange drawn on the sale, confirming that a properly drafted reservation of title survives complex financing arrangements. The trade-off is that revendication only works while the specific goods remain; once they are resold or transformed, your claim shifts to the proceeds or is lost.

To be effective, the clause must be agreed in writing no later than delivery — a reservation of title slipped in only on the invoice after the goods have arrived is fragile. Build it into your order confirmations and general terms and conditions, secure the buyer's acceptance, and keep delivery documentation that lets you identify your goods in the buyer's warehouse. Because retention of title is central to the whole subject, we treat it in depth in a dedicated guide; here it is enough to say that no supplier selling on credit into France should ship without one.

Personal and bank guarantees: cautionnement and the autonomous guarantee

Where the buyer's own covenant is not enough, you can ask a third party — a parent company, a director, or a bank — to stand behind the debt. French law offers two very different instruments. The cautionnement, defined by Article 2288 of the Civil Code, is a suretyship: the guarantor (caution) undertakes to pay the seller if the buyer does not. It is accessory to the underlying debt, meaning the guarantor can raise the same defences as the buyer — that the goods were defective, that the price is disputed, that the claim is time-barred. That accessory character protects the guarantor but weakens the security from the seller's point of view.

The garantie autonome, or autonomous guarantee, codified at Article 2321 of the Civil Code, is the stronger instrument. The guarantor promises to pay a defined sum on the terms of its own undertaking, independently of the underlying sale. Because it is independent, the guarantor cannot refuse to pay by pointing to disputes about the goods or the invoice; a first-demand guarantee (garantie à première demande) is payable on the seller's call, subject only to manifest abuse or fraud. This is why exporters and their banks favour autonomous guarantees for large or cross-border supply: they convert a commercial risk into something close to cash.

A cautionnement carries strict formalities under French law, in particular a manuscript acknowledgement by the guarantor of the nature and extent of the commitment where the guarantor is a natural person. French courts regularly refuse to enforce sureties that do not comply, so the drafting must be exact. When a bank issues the guarantee, you also gain the comfort of an institutional counterparty; when a director or parent company gives it, assess that party's own solvency, because a guarantee is only as good as the guarantor behind it.

Documentary credit and delegation of payment

For international sales, the classic banking security is the documentary credit (letter of credit). The buyer's bank undertakes to pay the seller against presentation of conforming shipping documents. Payment depends on the documents, not on the buyer's willingness to pay, so a confirmed documentary credit gives the exporter a bank's promise in place of a distant buyer's. It is more expensive and document-heavy than other methods, but for first dealings with an unknown counterparty or a difficult jurisdiction it remains the benchmark secure instrument.

A lighter, purely French mechanism is the delegation of payment (délégation de paiement), governed by Articles 1336 and following of the Civil Code. Here a debtor (the délégant) arranges for a third party who owes it money (the délégué) to undertake to pay the seller (the délégataire) directly. The seller acquires a right against a second debtor without losing its right against the first. Delegation is widely used in subcontracting chains and where your buyer is itself owed money by a solvent end-client whose payment you can capture at source.

The essential condition is the délégué's own acceptance: a mere instruction by the buyer that a named third party will settle the invoice is not a delegation and gives you no right to sue that third party. The delegated party must take a direct, personal undertaking towards you, which can be recorded in a tri-party document or in an exchange of letters, and French courts have accepted that acceptance may even be tacit. A delegation created before the buyer's cessation of payments generally holds, but one arranged once the buyer is already insolvent may be set aside unless it is a payment method customary in the trade.

Pledges over goods and receivables (gage and nantissement)

You can also take security over specific assets of the buyer. A gage, governed by Article 2333 of the Civil Code, is a pledge over tangible movable property — stock, equipment, vehicles. It gives the secured creditor a preferential right to be paid from the value of the pledged goods ahead of unsecured creditors, and, depending on how it is structured, a right of retention. French law allows a pledge without dispossession, so the buyer can keep using the goods while you hold security over them, provided the pledge is registered.

A nantissement is the equivalent security over intangible assets — most usefully a pledge over receivables (nantissement de créances) or over a business (nantissement de fonds de commerce). Taking security over your buyer's own book debts, or over its business, can be a powerful backstop where the buyer has no free tangible assets but a healthy order book. As with a gage, the value of the security depends on correct registration and on your priority relative to other secured creditors and to any assignment of the same receivables.

Pledges are more complex and costlier to put in place than a retention-of-title clause or a guarantee, and they usually make sense for larger or longer-term exposures rather than for one-off sales. Their advantage is rank: a properly perfected pledge or nantissement gives you a preferential claim in the buyer's insolvency, which is exactly where unsecured suppliers are left exposed. Registration formalities and priority against competing creditors are technical and should be handled with local advice.

Credit insurance and choosing the right payment instrument

Instead of taking security from the buyer, you can transfer the risk to an insurer. Credit insurance (assurance-crédit) covers the risk that a business customer becomes insolvent. The insurer assesses your customer portfolio, sets a covered credit limit for each buyer, monitors their solvency, and indemnifies you if a covered buyer defaults. It combines three services in one product: prevention through ongoing monitoring, indemnification on default, and support with contentious recovery.

Credit insurance never covers the whole exposure. A deductible always stays with the insured — in practice indemnification commonly falls in the range of 70% to 90% of the covered receivable — and the annual cover is capped. Premiums are calculated as a small percentage of insurable turnover, and cover is traditionally focused on domestic French customers, though insurers increasingly offer export extensions for other European countries. Public-body debts and consumer debts are typically excluded, so credit insurance is a B2B tool aimed at your commercial customer base.

Choosing between these tools is a matter of matching the instrument to the deal. For a small, repeat customer, a retention-of-title clause plus sound payment terms may be enough. For a large one-off order to a new buyer, you might combine an advance payment, an autonomous guarantee and credit insurance. The choice of payment method interacts with the choice of guarantee: an irrevocable bank transfer, a documentary credit, or an accepted bill of exchange each carries its own risk profile, which we compare in the guide to payment methods for B2B in France.

Matching the security to the risk and to priority in insolvency

The real test of any payment guarantee is what happens when the buyer stops paying — and above all when the buyer enters an insolvency procedure. In that scenario, unsecured suppliers rank behind employees, secured lenders and the public treasury, and often recover little. The purpose of taking security is to move up that ranking, or to sidestep it entirely by relying on someone other than the buyer. Retention of title lets you reclaim your goods as owner; a pledge or nantissement gives you a preferential claim; an autonomous guarantee, a documentary credit or credit insurance shifts the risk onto a solvent third party or insurer.

The table below summarises how the main payment guarantees in France compare on the questions that matter: who ultimately pays you, whether the security depends on the underlying sale, and how it fares in the buyer's insolvency. The right answer is rarely a single instrument. A supplier that reserves title, insures its receivables and takes a first-demand guarantee for its largest customers has built a layered defence that survives most payment failures.

Frequently asked questions about payment guarantees in France

How do I secure payment from a French buyer?

Combine the payment guarantees that fit the deal. For most B2B sales, reserve title to the goods under Article 2367, agree sound payment terms, and for larger orders add an advance payment, an autonomous guarantee or a documentary credit. Credit insurance can then cover the residual insolvency risk across your customer base.

What is the best payment security in France?

There is no single best instrument. For a seller of goods, retention of title is the most valuable because it lets you reclaim your property in the buyer's insolvency. For large or cross-border orders, a first-demand autonomous guarantee or a confirmed documentary credit gives the strongest protection, because payment no longer depends on the buyer.

What is a garantie autonome?

A garantie autonome, or autonomous guarantee, is a guarantee under Article 2321 of the Civil Code that is independent of the underlying sale. The guarantor promises to pay a defined sum on its own terms, so it cannot refuse to pay by raising disputes about the goods or the invoice. A first-demand version (garantie à première demande) is payable on your call, subject only to manifest abuse or fraud.

Does retention of title really help if the buyer goes insolvent?

Yes — that is precisely where it is most useful. A seller who reserved title in writing no later than delivery can bring an action to reclaim the goods (revendication) in the buyer's insolvency, provided the goods still exist in kind and are identifiable. The seller recovers property as owner rather than ranking as an unsecured creditor.

Should I ask for a deposit or advance payment?

Usually yes, especially for new customers or bespoke orders. An acompte is a firm first instalment that binds both parties, whereas arrhes leaves each side a right to withdraw. Staged payments tied to milestones limit how much of the order you finance on trust at any one time.

What is the difference between a cautionnement and an autonomous guarantee?

A cautionnement under Article 2288 is accessory to the debt, so the guarantor can raise the buyer's own defences before paying. An autonomous guarantee under Article 2321 is independent of the sale, so the guarantor must pay on its terms regardless of disputes about the goods. The autonomous guarantee is the stronger security for a seller.

Can I take security over my buyer's assets?

Yes. You can take a gage over tangible movable property under Article 2333, or a nantissement over receivables or a business. Both give a preferential claim ahead of unsecured creditors in insolvency, but they require correct registration and their value depends on your priority against competing secured creditors.

How our French lawyers help with payment guarantees in France

Petroff Avocats advises both suppliers and buyers on securing and structuring payment. For sellers, we draft enforceable retention-of-title clauses, autonomous guarantees, cautionnements and delegation agreements, put pledges and nantissements in place, review general terms and conditions, and act to reclaim goods or enforce guarantees when a buyer defaults or becomes insolvent. For buyers and guarantors, we assess the guarantees you are asked to give, challenge non-compliant sureties, and negotiate balanced security packages. Whether you are selling into France from abroad or contracting with a French counterparty, we help you match the security to the risk and to your position in insolvency.

This article is for general information only. It does not constitute legal advice and does not create a lawyer-client relationship. The rules on payment guarantees, security interests and insolvency in France are technical and fact-specific. Contact our French lawyers for advice on your situation.