First check whether the invoice is validly outstanding
A missed payment might be an administrative error, but it could also be a complaint or a money problem. First, check whether the agreed payment date has passed. Check your bank, any partial payments, credit notes and the invoice address. Is the correct purchase order number on the invoice and did you send it to the agreed contact person or the invoice portal? Next, get the quotation or agreement. What did you deliver and what is the amount based on? Gather the sign-off, the invoice, dispatch details, timesheets or delivery confirmation, and previous correspondence. A complete file saves time if someone else has to assess the claim.| Customer response | Practical next step |
|---|---|
| Invoice not received | Send a copy and confirm receipt. |
| Payment forgotten | Agree a specific payment date. |
| Disagreement with the work or amount | Ask which part is being disputed and assess the complaint. |
| Temporarily out of money | Discuss a feasible payment plan. |
| No response | Send a written reminder and assess the debt collection. |
Get in touch and confirm the appointment
Call your contact person or the accounts department. Ask whether the invoice has been approved, what is holding up payment, and on what date you can expect to receive the money. ‘It will be included in the next batch of payments’ is less useful than a specific date that you can track. Follow up a verbal commitment with a brief email to confirm it.Example: confirmation following a telephone call
Dear [name],
Thank you for our conversation. There is still €[amount] outstanding on invoice [number]. You mentioned that the invoice has been approved and that the amount will be paid into our account by [date] at the latest. The invoice is attached. Please let us know if you need any further information to finalise this.
Yours sincerely,
[name and company]
Send a reminder and choose the appropriate reminder notice
State the invoice number, original due date, outstanding amount and your payment details. Attach the invoice once more and request payment or a concrete response. Keep a record of what you send and what the customer replies. Use one of the if necessary Examples of payment reminders.A business customer
In a commercial agreement, statutory commercial interest and collection charges may become payable if payment is not made. A reminder is not always necessary beforehand; check the agreement and statutory conditions. A reminder remains a sensible first step. There is no general statutory rule that you must send three reminders.A consumer
If you want to charge collection fees to a private customer, they must first be sent a correct, free-of-charge fourteen-day letter after default has occurred. The fourteen days begin on the day following receipt. State the amount of collection fees that will apply if timely payment is not forthcoming. Also keep proof that the letter reached the customer. A text stating only ‘within 14 days of the invoice date’ does not suffice for this. Nor does an original payment term of fourteen days replace this additional consumer protection. The Case law explains the 14-day notice. If in doubt, have the letter and the question of whether default has occurred checked by a lawyer.Interest and collection charges: make the calculation clear
For commercial transactions, use the commercial interest rate; for consumer transactions, use the standard statutory interest rate, unless a valid alternative interest rate agreement applies. Interest rates are subject to change; please check the current statutory interest rate. Make a note of the principal amount, start date, end date and any instalments, so that your calculation can be verified. For consumers, there are statutory limits on debt collection charges. The first bracket is 15% on a maximum of €2,500, with a minimum of €40. For an unpaid principal amount of €800, for example, this amounts to €120, provided the conditions are met. You do not add any separate reminder or administration fees on top of this. For business customers, valid contractual agreements may differ. See the explanation of debt collection charges.When is a payment arrangement sensible?
A customer who admits fault but is temporarily strapped for cash can sometimes better pay in instalments. Agree on amounts and dates, and record what happens to interest and costs. Make an arrangement that you can actually monitor; ‘as soon as there is money’ offers little certainty.Example: an outstanding balance of € 1,200
You agree with a business client on three payments of €400, due on 5 October, 5 November and 5 December. You confirm that this relates to invoice F2026-031, whether any interest and charges are included, and what the consequences will be if a payment is missed. After each payment is received, you update the outstanding balance.Debt collection agency, bailiff or court?
A debt collection agency requests payment on your behalf, but cannot seize assets itself. A judicial bailiff can serve official documents and enforce a court judgement. For forced collection, an enforceable title is required, usually a judgement. The differences between a debt collection agency and a bailiff determine what kind of assistance is appropriate. Ask in advance about the costs if the customer fails to pay, any legal costs and what you need to provide. In the event of a dispute over the substance of the matter, a legal assessment is often more useful than increasingly stringent standard letters. Furthermore, winning a case does not guarantee that the customer will pay up. Also check the cover provided by any existing business legal expenses insurance.Process an unpaid invoice correctly in your accounting
Do not issue a credit note just to make a late payer disappear from your accounts receivable. The payment obligation still exists. A price reduction, return or waived amount is a different situation from a claim that is presumably uncollectible. Under the invoice method, you can reclaim remitted VAT as soon as uncollectibility is established, at the latest one year after the final payment date has passed. Process this in the tax return for that period. If payment is subsequently made after all, you declare the corresponding VAT again. Under the cash accounting method, unreceived VAT has generally not yet been remitted. See the The Tax and Customs Administration on bad debts. The tax treatment of a VAT refund does not mean that the civil liability automatically lapses. Keep the file and assess the valuation of the receivable separately in your annual accounts. In the case of old or disputed receivables, do not delay seeking legal advice until the limitation period is about to expire.Frequently Asked Questions
Do I need to send three reminders before I pass the matter on to a collection agency?
No. There is no general requirement of three reminders. Which steps are needed depends on the agreement, the default and whether your customer is a consumer. For consumer collection costs, a correct, free-of-charge fourteen-day letter is required.
Am I allowed to stop working if the client does not pay?
Suspension may be possible under certain conditions, but is not permitted or wise in every situation. Check the contract, the interconnection between the obligations and the severity of the arrears. Have a disputed or large assignment legally reviewed before halting the work.
Do I have to pay VAT if my client hasn't paid yet?
Under the invoice method, you normally declare the VAT on the basis of the invoice, even if the customer has not yet paid. There is a refund scheme for a bad debt. Under the cash accounting scheme, the point at which VAT becomes due works differently.
Can I credit an invoice because the customer is not responding?
Silence in itself is not a reason to reduce the invoice. Keep the claim visible. Issue a credit note if there is an actual correction, price reduction or write-off, and record the reason why.
