Step-by-step plan: Customer does not pay invoice
You have supplied a service or products to your customer and have sent the invoice.There is no further communication, and eventually the payment deadline passes. Your customer has not yet paid. This step-by-step plan sets out what you can do.
Personal contact with customers often works best. Whether it is the best approach in your situation depends on the agreements within your organisation and the relationship with your customer. There may be circumstances where calling is not possible. For example, due to a lack of telephone numbers or such a large customer base that it takes too much time to call.
If you call, ask whether the service has been satisfactory and whether the invoice is correct. This personal approach means you can ask why payment has not been made. Always make notes of these phone conversations. If you cannot make contact on the phone, you can also send a friendly letter or e-mail.
A payment reminder is the first formal step if your invoice is not paid within the agreed term. It is a friendly reminder that you send a few days after the payment term has expired. State that you will charge the statutory interest if your customer continues not to pay.
If your customer is a private consumer, you must first send a demand for payment, free of charge. You comply with this by sending a letter of formal notice. Is your customer a business? Then you do not have to do this and you can follow the collection procedure described in your general terms and conditions.
What is a letter of formal notice?
A letter of formal notice (aanmaning) is a demand for payment, also known as a demand letter (sommatie), in which you:
- refer to the delivery, the invoice, any telephone calls, and the payment reminder;
- set a payment term of 14 days;
- mention collection costs and legal action if payment is not made.
Send the letter both by registered post with confirmation of receipt and by regular mail. Keep your own copies of the letters as well. You can also send the notice by email. But if you want to be sure that your letter of formal notice arrives, it is better to send it by registered post and ask for a confirmation of receipt. This way you are legally covered if your customer says they have not received the letter.
Is your customer still not paying your invoice or much too late? Then you may charge collection costs and statutory interest. Collection costs are the costs creditors incur when they have to put extra effort into getting their money from customers. You may also charge statutory interest. This is the interest that you can legally claim if your customer has overdue payments.
First investigate whether the customer can pay your invoice with, for example, a week’s delay. Is this not possible for your customer? Then agree on a payment arrangement. Put this arrangement in writing and agree that the arrangement will lapse if your customer does not pay at the agreed times.
Are you unable to make your customer pay the outstanding invoice? Then consider hiring a debt collection lawyer, debt collection agency or bailiff. These are companies that collect invoices on your behalf:
- A debt collection agency sends letters requesting payment, but may not enforce payment.
- A bailiff can start legal proceedings. They can also use coercive measures, such as seizure and sale of your customer's goods. To do so, they usually first need a decision from a judge.
- A debt collection lawyer can send reminders, prepare a summons, and file for a debtor's bankruptcy.
What if your customer is located abroad?
Do you have a customer abroad who does not pay their invoice? Then you can also call in a collection agency. Make sure that the agency has knowledge of the country and speaks the language. If this does not work, you can start a European procedure for debt-recovery. The customer then receives a payment order and has 30 days to respond. If they fail to do so, the court will force them to pay.
Finally, you can file a lawsuit. This usually goes through the courts of your customer's country. Do you want the Dutch court to decide? That is only possible if you have included this in your contract in advance.
Have you delivered products or goods that were not paid for on time? You might prefer to get these back in order to limit your damage as much as possible. There are 3 ways to do this:
- Retention of title: do your general terms and conditions contain a retention of title? Then you remain the owner of a delivered product until the customer has paid. You can reclaim your delivered goods if your customer does not pay.
- Right of recovery: this is a legal provision that allows you to reclaim delivered goods if your customer does not pay. This is also possible if your customer has been granted suspension of payment (moratorium) or been declared bankrupt.
- Offsetting: do you also buy products or services from your customer? Then you might still owe money. In this case, you can offset your debt and the money you are still entitled to. This is also possible in case of bankruptcy. This is only possible if your customer's general terms and conditions do not prohibit offsetting. And if you have made clear agreements about this with your customer.
When you invoice your customers, you also calculate VAT. You pay that VAT to the tax authorities when you file your VAT return. If your customer ultimately does not pay the invoice or pays only part of it, you will also not be paid the VAT. And you yourself have paid VAT on an amount you did not receive. You can then reclaim this VAT. Read how to reclaim non-recoverable VAT (in Dutch).
Does your customer continue to not pay your invoice? Then you can file for the customer's bankruptcy. If your customer has already been declared bankrupt, submit your claim to the trustee (curator) as soon as possible. This is officially called 'submission for verification' (indienen ter verificatie). Call in a specialised advisor to do this.
There are several ways to prevent financial loss from customers who do not pay, such as:
- Draw up general terms and conditions in which you state, among other things, that if payment is not made on time, no further deliveries will be made.