Meaning of Payment Reminder

If a customer does not pay his invoice on time, he must be reminded of the payment in due time. He receives a payment reminder so that the payment claim does not expire. The payment reminder can be repeated if the customer ignores the first reminder. The writing of payment reminders is subject to legal regulations. In order for a payment reminder to be legally effective, you have to comply with certain regulations when writing.

What is a payment reminder?

According to SPORTINGOLOGY, a payment reminder is also called a reminder designated. The first letter, however, is more cautious about the name – after all, you just want to remind the customer of the outstanding payment. And don’t get scared off because of a payment arrears. With the payment reminder, the obligee clearly requests the debtor to pay the outstanding invoice. In order to be able to write such a request for payment, an entrepreneur must first have submitted a commercially correct invoice. However, if the customer does not pay this on time, the defaulting payer may be reminded to settle the invoice. It should be noted that the customer may have already made a payment within the payment period, but this is not yet visible on the creditor’s account. Beware: some banks take a lot of time to credit.

Which laws regulate the reminder?

There are precisely defined deadlines for entrepreneurs who want to write a reminder . Payment reminders are regulated by law in dunning. Information on this can be found in both the German Civil Code (BGB) and the Commercial Code (HGB). These regulations regulate how a dunning procedure must be carried out in a legally secure manner. A payment reminder can be a prerequisite for putting a debtor in default. If the debtor is in default, legal action can be taken against him after a sufficiently long period has elapsed. A default does not occur, however, if the debtor is not to blame for the non-performance of the payment. He must, however, provide evidence for this fact, so the burden of proof lies with the person being reminded.

Legal deadlines for payment reminders

Statutory deadlines apply to the payment reminder, similar to what is the case with invoices. A reminder does not have to be sent if there is a payment term in an invoice was agreed. A common formulation is, for example, “Payable within 14 days of receipt of the invoice”. With the use of this clause, a default in payment occurs automatically if the 14-day period expires without receipt of payment. A reminder does not have to be issued if the debtor himself promises to pay the bill at short notice, i.e. if he is himself in default. If the debtor refuses or delays payment because he is dissatisfied with the delivery of the goods or the service, no separate reminder is required if the customer has explained the matter.

A debtor is in default no later than 30 days after receipt and the due date of an invoice. This is regulated by the aforementioned BGB and HGB codes, provided that no deviating regulations are noted in the terms and conditions or on the invoice. If the debtor is a private end consumer, the consequences of not paying the invoice and the delay must be pointed out in any case. In the B2B (business-to-business) area, the legislator presupposes an informed businessman as a customer, he does not have to be specifically advised of the consequences of a delay in payment. In the event of a reminder, interest on arrears may be charged if the obligee is in default. Finally, the creditor grants the debtor an involuntary loan. However, no interest on arrears may be charged for the first reminder or payment reminder. Strong consumer protection comes into play here.

Payment reminder form

A payment reminder does not require any special form, because it can be made orally, in writing or simply informally. However, the written form should be adhered to for reasons of evidence. Incidentally, an online reminder in PDF format is an attachment to an email, just like a letter. The debtor always receives the original of the reminder, while a copy remains with the obligee. The document itself is called a dunning letter. Companies can write payment reminders using a letterhead stored on the PC. You don’t have a reminder template yet, then you can download a template in Word format here for free. This sample letter can be used as a form with the corresponding text for the payment reminder or as a template for later reminders. The use of an invoice program supports the creation of a payment reminder. Click here for our payment reminder template. So you don’t forget to send your unwilling customers reminders in good time and thus put them in default.

What information must a reminder contain?

A written reminder must be a clear request to the debtor to pay the invoice immediately – or within the new deadline. The following information must be included on a reminder:

  • Information about the relevant invoice (number and invoice date)
  • Information about the new payment term
  • Day-date of the reminder
  • Dunning level (e.g. 1st reminder)

Our sample letter for Word, which we provide online, naturally contains the relevant fields for this data, which you only need to fill out.
If it is already the 2nd reminder, the customer unwilling to pay can now be charged interest on arrears. In addition, legal action can be threatened if the debtor continues to fail to honor the payment reminder. A reminder can be sent by registered mail and acknowledgment of receipt so that the date of dispatch and the day of receipt of the mail by the defaulting customer can be documented in writing.

Interest on arrears for a payment reminder

If a debtor is only in default through the payment reminder, he does not have to assume the costs that the obligee has incurred up to that point. He must first reimburse the creditor for the costs caused by further payment reminders. Therefore, from the second reminder onwards, the creditor can levy reminder fees. How high these dunning fees may be is regulated in the district of the respective higher regional court. Depending on the federal state (the creditor’s registered office counts), the dunning fees can be different. Before legal action can be taken against a debtor, the creditor usually writes up to three reminders, usually every two weeks. If the debtor does not respond to the third payment reminder either, legal steps can be initiated and a dunning procedure opened. TheYou can apply for a dunning notice directly in your local court. You do not need to submit any documents at first. If your customer objects to the order for payment, you should then contact a lawyer.

Payment Reminder