Unpaid invoices
Unpaid invoices
Unpaid invoices. Every entrepreneur has to deal with them sooner or later. When unpaid invoices pile up, it can have a significant negative impact on a company's cash flow. When a customer fails to pay, it is crucial to know what your rights are and what steps you can take to still collect these unpaid funds and possibly additionally receive interest and compensation.
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At Bannister, we will work with you to see what the most efficient solution is to still get the invoice paid. After all, you want to recover your unpaid invoices quickly and as cost-effectively as possible. The approach to invoice recovery differs depending on the circumstances, such as, but not only:
- Is the debtor a consumer or a company?
- Was the invoice disputed timely and correctly or not?
- What do the general terms and conditions state?
- Are interest and/or a damage clause provided?
- Within what time limit can valid protests be made?
- Which law applies?
- Is an arbitration clause provided?
- Is there a case of force majeure?
- Is the debtor solvent?
The recovery of an unpaid invoice is therefore tailor-made. Our corporate law team specialises in this matter and makes it its business to advise the right approach to its clients on a case-by-case basis. Our job is to unburden you.
At Bannister, we also like to take a proactive approach. We are happy to screen your general terms and conditions and the way you invoice and send reminders to then advise you on changes that will reduce the likelihood of unpaid invoices.
Invoice recovery differs fundamentally depending on whether the debtor is a consumer or a business.
Since 1/09/2024, the amicable recovery of debts towards consumers has been additionally regulated by law. The coercive action of debt collection agencies has thus been curbed. With the introduction of the new Book XIX in the Code of Economic Law a new cascade system of recovery has been imposed, requiring the entrepreneur to send a free reminder first, before being allowed to declare the debtor in default and claim default interest.
Moreover, such late payment interest is limited as follows. The outstanding amount may be increased by a maximum annual interest calculated at the reference interest rate increased by eight percentage points referred to in Article 5, second paragraph, of the Law of 2 August 2002 on combating late payment in commercial transactions and this calculated from the calendar day following the day on which the free reminder was sent to the customer, and With a flat rate of:
- 20 euros if the balance due is less than or equal to 150 euros;
- €30 plus 10 % of the amount due on the tranche between €150.01 and €500 if the balance due is between €150.01 and €500;
- 65 euros plus 5 % of the amount due on the tranche above 500 euros with a maximum of 2,000 euros if the balance due exceeds 500 euros.
If your current general terms and conditions still contain different clauses (for example, many general terms and conditions still provide that interest is due from the due date), those clauses may be void. Updating your set of general terms and conditions is therefore imperative.
The mandatory free first reminder is also subject to certain formal requirements and must include, among other things: a clear statement of the total amount due, the name of the company, the company number, a precise description of the product or service that led to the debt, and the date of delivery or provision of services. Many invoicing programmes do not yet appear to have adapted to this. However, it is important that this first reminder is sent correctly. If this is not the case, a new reminder must be sent so that you can proceed with full recovery of the debt with interest and a penalty clause. It is therefore advisable to seek the assistance of one of our experienced lawyers.
However, if the debtor does not hear from or pay anything (after that initial 14-day period), it can then proceed to formal notice. A notice of default is a second official letter asking the debtor to pay the debt within a certain period of time.
If the debtor still does not pay after this formal notice, further steps can be taken. You can do this by instituting proceedings outside or within the court start up. The latter presupposes the intervention of a lawyer. A collection agency cannot act for you in court. The intervention of a collection agency can certainly be useful, but if the debt is disputed, it is often more useful to engage a lawyer immediately.
In addition to the possibility of the debtor-entrepreneur to be summoned before the competent court there is the possibility of simplified IOS procedure (recovery of undisputed money debts) to the bailiff. This is a collection procedure which, in principle, is conducted without the intervention of a court. However, this is only possible against companies and insofar as it concerns invoices that have not been disputed or protested by the debtor. As soon as any dispute arises, the bailiff must discontinue collection and you will have to resort to a lawyer and the courts. We are happy to assist you in considering whether these proceedings have a chance of succeeding. If the answer is positive, we can instruct the bailiff to open IOS proceedings. If the answer is negative, we will consider the chances of success of proceedings before the court.
If this procedure has no chance of success, we can proceed to subpoena. By having a writ served by a bailiff, your debtor is summoned to appear in court on a specific day. If you receive a positive verdict through this traditional court procedure and people would still not pay (minority of cases), Bannister can further assist you in choosing the most effective implementation measures. It is then considered whether the debtor can be forced to pay through service or through batter on, for example, the debtor's car, house or wages. However, the bailiff will first have to serve the judgement, also known as the enforceable title, on your debtor.
If an invoice challenged correctly and in a timely manner it is not immediately due and payable (and, for example, the IOS procedure is not open). Indeed, by protesting an invoice, the debtor indicates that he does not agree with the performance or amount invoiced. If the creditor does not agree with that reason for the protest, it is up to the latter to prove that the protest is incorrect and that the invoice was indeed invoiced correctly and in accordance with the agreements.
Such evidence is not always easy to provide. Here, too, Bannister is happy to assist its clients. After all, the motto is "he who writes stays". In the run-up to legal proceedings, it is important to weigh up every word as, after all, various legal consequences can be derived from it (such as an admission of guilt or a waiver of rights).
It may also be that your debtor bankrupt is declared. However, this does not mean that you cannot get your money back. In a bankruptcy, a trustee will head the company's assets. As a creditor, you need to file a declaration of claim in the bankruptcy and you also need to prove this claim. It is imperative that this declaration is timely. If the claim is filed late or not proved, you may lose your chance of compensation. Our specialised team will be happy to help you with this.
It may also be that directors civilly liable be sued in bankruptcy. In case of civil liability, you, as a creditor of the company, can file a claim against the directors to recover your damages. They can then personally vouch for the payment of their company's invoices.
If you have further questions regarding the recovery of unpaid invoices, please do not hesitate to contact us. The experienced team of Bannister lawyers is ready to help you.
How do we handle unpaid invoices?
When an invoice remains unpaid, it is important to react quickly and thoughtfully. Our approach is always legally sound, efficient and tailored to the specific situation*. Each case is evidently specific and requires its own approach.
Frequently asked questions
If your customer disputes the invoice, it is important to respond quickly and correctly. As a business owner, you are obliged to respond to a dispute. Failure to do so may be considered by the court as tacit acceptance of the dispute.
It is important not to wait too long before engaging a lawyer when your client fails to pay the invoice. When it comes to a disputed invoice, it may be necessary to seek legal advice to determine the appropriate steps and discuss what can and cannot be answered. It is essential to put the right things in writing in the early stages, such as a notice of default, in which you make it clear that you disagree with the dispute.
