You checked the customer on acceptance. You completed the reminder process with the customer. No result. Extrajudicial debt collection through an external partner was also not enough to urge the customer to pay. In spite of great management and great efforts, some customers simply refuse to pay. This leaves you no option but to start legal proceedings.
If a customer refuses to pay, even after repeated reminders, the supplier may request the Court to enforce a Court Order for payment.
This starts with the following two steps:
Once the court issues a decision, the bailiff is involved once more. The bailiff is a public servant responsible for the summons and the execution of the court decision. This means he/she can demand the money from the non-paying customer, or conclude a settlement plan with this customer. If the bailiff is unsuccessful, he/she may ask the court for permission to sequester the company’s income or goods. These may then be sold to pay the claimant from the proceeds.
So the power of a bailiff by far exceeds the power of a solicitor. The solicitor may merely point out the legal consequences of the customer’s non-payment. However, in some cases this is enough to force full or partial payment. External parties are taken more seriously.
Tip: Never involve a debt collection agency if your solicitor has already threatened to start legal proceedings. This will undermine your credibility. You are threatening with legal steps without carrying out your threat in such a case. The reverse is not a problem.
Do not consider judicial debt collection unless:
Involving the court and the bailiff comes at a high cost. For this reason, please ask your consultant about the fees and the recovery probability in advance. Also ask if the fees are charged to you or if they can be claimed from the customer. You are generally required to fund the start of the procedure.
Sending a reminder by registered letter as the last step is highly recommended before taking legal action. This way, you will have undeniable proof that the customer received the claim. Also, if the customer does not respond, the claim is regarded as accepted.
It is best to ensure you start the legal proceedings with as much substantiation as possible. This means always having your invoices fully in order. This would also include signed order slips and delivery confirmations. This precludes a customer company from invoking form errors as a reason for non-payment. Alternatively, you can set out the competent court in your General Terms and Conditions, and list which fees are charged to the customer in the case of arrears in payment.
The European Commission has supported the claimants. The European Directive about arrears in payment states that the government bodies must pay their invoices within 30 days. This also applies to companies, unless a different term was agreed. Exceptions are permitted only if it can be proven that even longer payment terms are not detrimental for either party.
In practice, mainly large companies attempt to make use of this exception to gain a long postponement of payment from small suppliers.