Step-by-step plan: customer does not pay invoice

1. Check whether the payment term is correct

If you sell products or provide services, your customer must pay within an agreed timeframe. For consumers, you can determine the payment term yourself. Do you supply to companies and governments (B2B)? In that case, legal payment terms apply.

2. Call your customer

Depending on your relationship with the customer, it is sometimes wise to call first. Ask whether the service has been satisfactory and whether the invoice is correct. This personal approach allows you to inquire why payment has not been made. Always make notes of these phone conversations.

3. Send a payment reminder

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.

4. Send a letter of formal notice

If your customer is a consumer, you are obliged to first send a demand for payment, free of charge. You comply with this by sending a letter of formal notice. Is your customer a company? Then you are not obliged to do this and you can follow the collection procedure described in your general terms and conditions.

Contents of the notice letter

A letter of formal notice is a demand for payment, also known as a demand letter, 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 denies that they have received the letter.

5. Charge collection costs and statutory interest

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 receiving their money from customers who do not pay the invoice on their own. You may also charge statutory interest. This is the interest that you can legally claim if your customer has overdue payments.

6. Make a payment arrangement

It is not wise to immediately propose a payment arrangement to your customer. 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.

7. Engage a debt collection agency, bailiff, or debt collection lawyer

Are you unable to make your customer pay the outstanding invoice? Then consider engaging a debt collection agency, bailiff, or debt collection lawyer. 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.

Note: From 1 July 2023, debt collection agencies must have a permit to perform collection services. These companies are then included in a public debt collection register. Debt collection activities are subject to requirements for quality and professionalism.

What if your customer is located abroad?

Do you have a customer abroad who does not pay his 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. The main rule is that the court of your customer's place of business has jurisdiction. You can include in your contract or terms of delivery and payment that the Dutch court has jurisdiction and that Dutch law applies.

8. Use Other Legal Remedies

You have delivered products or goods that were not paid on time. You might prefer to get these back in order to limit your damage as much as possible. There are 2 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 as long as 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 in the event of deferment of payment (moratorium) or bankruptcy.

9. Reclaim non-recoverable VAT

If you send an invoice to your customers, you must file and pay the VAT on it. If your customer ultimately does not pay or only partially pays the invoice, your claim is (partially) non-recoverable. You paid VAT that you did not receive. You can then reclaim this VAT. Read how to reclaim non-recoverable VAT (in Dutch).

10. File for client's bankruptcy

Does your customer ultimately 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 curator as soon as possible. This is officially called 'submission for verification'. Call in a specialised advisor for this.

11. Avoid the risk

There are several ways to prevent financial loss from customers who do not pay, such as:

• Taking out credit insurance.
• Checking the financial situation of business clients.
• Drawing up general terms and conditions.