How to deal with unpaid invoices: a reminder process and automation for small businesses
Unpaid invoices cost more than interest. They take time to chase, strain customer relationships and can push a small business into a cash squeeze. A fixed process, ideally automated, turns chasing payments from an awkward personal task into routine. This guide describes the steps and the most important rules in Germany.
Prevent late payment with the invoice itself
Many invoices are paid late because they are unclear. State the due date as a calendar date, list the services clearly, include all payment details and offer simple payment methods such as bank transfer with a payment link. For larger orders, agree a deposit before work starts.
A fixed reminder schedule
Decide in advance when and how you send reminders, so it does not depend on mood or available time:
- A friendly payment reminder a few days after the due date.
- A first formal reminder about one to two weeks later.
- A final reminder with a deadline and an announcement of further steps.
- Handover to a debt collection agency or the court dunning procedure.
Default, interest and the flat fee in Germany
Under § 286 BGB, a debtor is in default at the latest 30 days after the due date and receipt of the invoice; for consumers, only if the invoice pointed this out. From then on, statutory default interest applies: 5 percentage points above the base rate for consumers and 9 points for business customers (§ 288 BGB).
Business customers in default also owe a flat fee of €40 (§ 288(5) BGB). Whether you claim it is a business decision; it often makes sense for repeat late payers.
Automate reminders
Most accounting tools can send reminders automatically on fixed days and record the status. Connected to the CRM, the sales team sees who is overdue before accepting a new order. Personal calls to important customers remain a human task.
When to escalate
If the final reminder is ignored, choose between a debt collection agency and the court dunning procedure, which can be applied for online in Germany. For small amounts, weigh the cost against the chance of payment and decide consistently.
Example: deposits for events in hospitality
Restaurants and hotels reduce payment problems with events by asking for a deposit when the booking is confirmed and invoicing the rest directly after the event. The deposit invoice is created automatically with the confirmation, and a reminder goes out if it is not paid within the agreed period.
Frequently asked questions
- Do I have to send a reminder before charging interest?
- Not always. Default can occur automatically 30 days after the due date and receipt of the invoice; for consumers only if the invoice mentions it. A reminder still makes sense for the relationship.
- Can I charge reminder fees?
- You can claim the actual costs caused by the default. For business customers, the €40 flat fee applies; flat reminder fees charged to consumers must reflect real costs.
- Is this legal advice?
- No. It is an overview of common rules. For disputes or larger amounts, involve a lawyer or a debt collection agency.
Sources
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