Late customer payments or complete payment defaults are very annoying for SMEs. They can cause liquidity bottlenecks and get companies into trouble. How should one deal with such situations?
Acting preventively
Know your customers. Late payments and defaults occur much less with long-standing partners than with new customers. In the case of new customers, check the commercial register to see if they actually exist. In the case of larger orders for new clients, it may be worthwhile to order an extract from the debt collection register. This will give you an insight into the customer's payment behaviour.
Seeking personal contact
Call your customer and seek a personal conversation. There might be a simple explanation. A solution can often be found during a call. If your client cannot pay the entire amount immediately, make a payment agreement, allowing your client to pay off the outstanding amount in several instalments.
Submitting a request for debt collection
The first thing you should do is send your customer an official letter of default. One to three reminders are usual. If payment is still not made, you can submit a debt collection request to the competent debt collection office. The debt collection office sends the creditor an order for payment. If the creditor does not contest this within 10 days, the process can be continued, and the actual debt collection procedure will be initiated. Such a procedure is time-consuming and leads to additional costs. Specialised debt collection companies offer support for these processes.
