20. December 2021

Dunning made easy


Monika from Veita
Author and finance expert


Often, owners of small and medium-sized companies shy away from sending out dunning notices. They are concerned that this could tarnish customer relations. But in doing so, they jeopardize their own cash flows. And that can threaten their existence. 

Studies by Creditreform Wirtschaftsforschung in Neuss show: The longer a company waits to take further steps after the receivables are due, the greater the likelihood that the debt will default - and the higher the costs of collection climb. 

Contact late payers in advance 

There are many reasons for late payment. It is therefore important to first check whether the customer is a long-standing customer or a new customer, what amount and what service is involved, and whether there have already been payment difficulties in previous years. 


It is just as important to clarify whether all billing processes were running correctly in-house. It's best if the company then contacts its customer by phone to kindly point out the outstanding payment and inform them how long the invoice has been overdue. If it turns out that it has been forgotten or lost, it sends the invoice again. 

Send payment reminders 

This enables companies to point out once again that payment is outstanding. For many customers, such a payment reminder is enough to get them to pay the bills. However, it must be clear: The reminder has no legal consequences. Good receivables managers know: A payment reminder has no legal consequences, but it is an adequate means of maintaining a positive atmosphere and a good business climate with the customer. 

The payment reminder has no legal consequences. But it can be used to maintain a positive atmosphere and a good business climate with the customer. 

Send first dunning notice 

A dunning notice is the legal basis when a payment is in arrears. Only on this basis can the company take further steps, such as judicial dunning proceedings. According to the law, it does not matter how the dunning notices reaches the customer. Therefore, it can be delivered orally, in writing and by fax or by mail. Although the tone of a dunning notice should be firm, it should always remain polite and friendly. 


Differentiate between private and business customers 

From a legal point of view, default always occurs when a debtor fails to pay a receivable even after receiving a reminder from the company. At the same time, the law stipulates that defaulting payers are automatically in default no later than 30 days after the due date. However, this 30-day rule requires the company to distinguish between B2B customers and B2C customers in its invoices. To protect consumers, it must comply with a special duty of disclosure: In its invoice, it must explicitly point out to private customers that, without payment, they will be in default after 30 days. Another essential condition for the 30-day rule for consumers: It is only applicable if the invoice contains a payment period or payment target. 

Calculate late payment interest 

Late payment interest can be charged from the first day on which the payment delay occurred. However, the legislator also differentiates here between corporate and private customers. The amount is based on the so-called base interest rate, which the Deutsche Bundesbank always publishes on its website. For some years now, it has been -0.88 percent. Corporate customers must expect an interest rate of up to nine percent above the base interest rate, while private customers can expect an interest rate of up to five percent above the base interest rate. 

Query prime rate (Deutsche Bundesbank)

Send another dunning notice 

Since the introduction of the 30-day rule, it is no longer necessary to send dunning notices to defaulting customers. Nevertheless, it is customary for companies to send their customers at least one dunning notice. Second and third dunning notices are also often common. In doing so, the company should set the payment deadline shorter and shorter. In this way, the pressure can be noticeably increased. 

Dunning in court or assigning debt collection 

If all else fails, the next step is to commission a debt collection agency to collect the outstanding debt or to initiate judicial dunning proceedings. When a judicial dunning procedure is initiated, the claimant receives a judicial dunning notice, which can even be enforced and remains valid for claims for 30 years. To start it, an application form must be filled out and sent to the competent court. Important requirements are that the customer has not paid despite a reminder and that his address is known. 

To the application form (Justice portal)

Conclusion: should I send a dunning notice? 

First, however, the company should examine the situation of the respective customer. After all, receivables management opens up special opportunities when it focuses on each individual customer with its economic situation, its past and future importance for the company. On this basis, it is then possible to negotiate amounts and payment obligations - and find individual solutions, such as stretching out payments over time, that everyone can live with. 

Receivables management opens up special opportunities when it focuses on each individual customer with their economic situation, past and future importance for the business. 

While sending a dunning notice is always advisable in principle, also in order to keep further legal options open, companies should carefully weigh up the advantages and disadvantages of initiating legal dunning proceedings or engaging a debt collection company. 

Also important: if a payment is not made, it should not automatically be concluded that the customer is unable or unwilling to pay. The task of receivables management is to understand the customer's motives and, for example, to avoid an inappropriate dunning process if the delay in payment is due to an incorrect or lost invoice, problems with product or delivery, etc. 

Interesting article? Share it:

Veita kennenlernen

Termin vereinbaren
Finden Sie heraus, wie wir Ihr Debitorenmanagement unterstützen können.