Sending effective reminder notices and managing your accounts receivable is necessary to assert your claims successfully and encourage customers to pay you. The inability to assert your rights to payment come with a high cost.
The basic requirement for effective reminders – or dunning procedure – is
that payment due dates are clearly stipulated on contracts or invoices and
that the reminder notice is sent on time in case of default of payment.
|Prompt reminder notice|
|What should you keep in mind? – If the contractually agreed payment deadline has expired (normally 10 to 14 days) you can send a prompt reminder notice to your customer in default. In this reminder please indicate that the customer is obligated to pay and also set a new time limit or deadline (5 to 10 days). Sometimes a customer may have forgotten about your invoice, so keep the reminder in a friendly tone.|
What should you keep in mind? – If the payment has not been settled after writing the prompt reminder notice, then send a dunning letter to the customer. Please explicitly use the subject line “1st Reminder”. Additionally, the reminder should reiterate the object of the contract or invoice, the delivery date, the invoice number and a new payment period. Set a new limit of 5 to 10 days. The limit should end on a working day, so that the debtor has an opportunity to meet the deadline. It is also important to include the specific calendar date by which the debtor must pay.
Additional reminders in a strict legal sense –- Please consider whether it is worthwhile to write additional reminders or if it is better to issue a court order directly because additional dunning letters do take a lot of time and expense. If you choose not to send a second and third reminder, please ensure that the debtor received the first reminder. You can do this by delivery of the reminder in person, delivery through a third party, a confirmation of the bill by the debtor or by means of a certified mail delivery. Otherwise there is the possibility that the defaulting customer can claim that he or she never received the reminder by arguing that I it was lost by the mail service.
What should you keep in mind? – If you still have not received the payment despite the new deadline, send a second reminder to the customer. The second reminder should be similar to the first one. Set a new time limit of a maximum of 10 days which should end on a working day. Select a specific calendar day by which the debtor must pay.
Damages caused by default – Expenditures involved in debt collection activities can be claimed from the debtor as damages caused by delay starting with the second reminder. The expenses cannot be more than € 2.50 per reminder.
What should you keep in mind? – If the second reminder proves ineffective as well, you should emphasize the seriousness of your claim by threatening to take legal action, encashment enterprise or going to court. Set another time limit again, but a short one. Indicate that any other legal action you take will involve additional costs for the debtor. It is recommended to send this third reminder by certified mail.
Your business relationship with the debtor –You should reconsider your business relationship with the defaulting customer. Suspend the sale and possibly stop scheduled deliveries or only deliver against prepayment.
Qualified legal help – In this situation you should consider retaining the services of an attorney who will exert increased pressure on the debtor to pay. Additionally, you can issue a court order or assign an encashment enterprise with the assertion of your claim. The attorney’s expenses for a legitimate claim must be paid fully by the debtor. With encashment enterprises you assign the claim for a part of its value to the encashment enterprise. The agency then tries to assert the claim for its own account.
A second and third reminder is not necessary in strict legal sense. You should consider whether it is worthwhile to write additional reminders or if it is better to issue a court order directly, since additional reminders require time and effort.
Forms ("paper" form procedure) – When you apply for a court order in writing, you must complete a pre-printed form for the automatic dunning procedure. This form is then sent to the local court responsible for dunning. You can purchase the pre-printed form in a stationery shop.
Processing though the dunning court – The dunning court considers the application in terms of formal correctness (e.g. whether all necessary fields are filled out correctly or if the default interest has been calculated correctly). The correctness of your claim is not checked at this stage. The dunning court then issues the court order and serves it to the debtor. At this point the debtor can settle the claim or file an objection against the order within two weeks.
Applying for a court order online – Use our website to request our law office to issue a court order:
There are considerable advantages in using online services to enter the information necessary to issue a court order. The online process is quicker than conventional paper form. Visit the following pages to learn about the timeline and benefits of online application:
If your claim is valid, the debtor must pay the full costs of your attorney. The following links provide an overview of the exact costs for applying for a court order:
Legal expenses and attorney’s fees are based on the amount of your claim.
How does it work ? –If the debtor fails to pay even after receiving a court order, and if the debtor does not file an objection, then you can apply for an enforcement order following the end of the payment period (usually 2 weeks). This enforcement order is then issued by the court and sent to the debtor. The payment and objection period here is also 2 weeks.
Execution warrant – If the debtor still has not paid after the enforcement order deadline expires, or does not file an objection, then the applicant (you, the creditor) receives a ”title“: your own enforcement order. With this title the bailiff is able to proceed against the debtor. It is also possible to the garnish the debtor’s wages or bank account. This title gives you the right to take legal action against private persons for 30 years, while claims in general usually expire after two to four years.
Objection of the debtor – If the assumed debtor files an objection, the dunning procedure will become a complaint because the claim is contested by the debtor. In this case, a legal proceeding is necessary to resolve the case and to determine to what extent your claim is valid.
Compulsory Enforcement -
With the enforcement order, certain enforcement measures can be
taken if the debtor still has not paid.
The following enforcement measures are available:
All information is presented to the best of our knowledge. We assume no responsibility for its correctness.