Debt Collection in Czech Republic
Does your company have to deal with debt collection in the Czech Republic because a Czech customer has not paid your invoice? Our Czech collection specialists and lawyers will be happy to help you. We will ensure that your outstanding invoices are paid quickly. Read here what we can do for you when you want to engage with a collection agency and recover debt form the Czech Republic.
"The credit management of Czech companies has greatly improved in recent years. This is also reflected in the payment behaviour in the Czech Republic".
International debt collection in Czech Republic
When doing business with a Czech trading partner you are confronted with different trading traditions and customs than those you are used to. In addition, the Czech Republic has different legislation and the people often speak a different language. This often makes debt collection in the Czech Republic complicated and time consuming. That is why you should call in our Czech specialists. They have the means to get your debtor to pay.
Payment behaviour of Czech companies
- In the Czech Republic a legal payment term of 30 days applies
- Payment behaviour has improved significantly in recent years
- A payment term of 14 days is customary in the case of reminders
Debt collection in Czech Republic
More than 10 years ago, payment morale in the Czech Republic was very poor. It was even the worst scoring country in terms of outstanding invoices. However, in recent years, the payment behavior of Czech companies has improved significantly. This is mainly the result of increasingly professional credit management of companies.
Nevertheless, a significant number of invoices are still not paid on time. Almost half of all commercial invoices are paid late. Although you should not expect extremely long payment terms, invoices are paid approximately 13 days late.
Advantages of collecting in Czech Republic
- Czech collection lawyers in your country
- Czech-speaking lawyers
- Highest success rates
- Collection throughout Czech Republic
- Always a single point of contact
- 24/7 online access to our portal
- No Cure No Pay debt collection
Czech lawyer in your country
It is best to contact a Czech lawyer or collection specialist to collect your invoice from a Czech debtor. For this you do not have to go to the Czech Republic, you can simply contact our specialists at Bierens. They have extensive knowledge and experience with the laws and regulations in the Czech Republic. It goes without saying that they collect in Czech, their native language. This way we know how to make your debtor pay quickly.
Debt collection procedure in Czech Republic
The collection process in the Czech Republic can be divided into two phases. In the extrajudicial phase we collect without the intervention of the court, in the judicial phase we do involve the court to get your Czech customer to pay. Because we are a law firm, we can assist you in both phases.
Our starting point is to always start the collection procedure in the extrajudicial phase. In this phase we try to avoid the intervention of the court. We will contact your Czech debtor to ensure that your debtor still pays. In the extrajudicial phase we have the following possibilities in the Czech Republic:
Written demand letters and phone calls
We send the debtor a written reminder and contact the debtor by telephone, requesting the debtor to pay. The debtor is then given several days to complete the payment. Interest and costs will also be claimed.
Drawing up payment arrangements
If necessary, we will agree upon a payment arrangement with your debtor.
Announcing legal proceedings
Often, the announcement of legal proceedings will persuade your Czech debtor to pay your invoice. If your debtor refuses to pay in the out-of-court phase, we can go to court in consultation with you. For this purpose, we do a credit check and analyse the financial situation of your debtor. This enables us to better assess your debtor's financial situation and determine whether legal proceedings are worthwhile. In addition, we will always let you know in advance what the possible costs are, and we will only start working after receiving your permission.
Would you like to start legal collection proceedings against your Czech debtor? Then the first question is in which country do you have to litigate: in your own country or in the Czech Republic? This depends on the competent court, i.e. the court that is competent to rule on your debt collection case.
In your general terms and conditions, you can make agreements about the competent court in the event of a (payment) conflict. This is also called choice of forum. Have no agreements been made? Then the main rule is that the court in the country of the defendant has jurisdiction. In this case the Czech court. You then will have to go to the Czech Republic to follow legal proceedings there.
In addition, the main rule is that the law of the country of the seller or service provider applies. In this case the law of your country is applicable. We then get this difficult situation where the Czech judge must judge the case based on the law of your country. A legal system he does not know. This is not a desired situation, which is why our advice is to make agreements about this in your general terms and conditions. In addition, you can also agree that you can litigate in your own country, should there be a lawsuit.
Debt collection laws Czech Republic
Judicial processes in the Czech Republic can often be very lengthy. The judicial system is very complex, which often leads to slow execution of judgments. Our Czech lawyers can advise you on the best legal procedure in your situation. Of course, we will assist you throughout the entire legal process.
Electronic payment order procedure
You can use this procedure if your claim is less than CZK 1,000,000 (€38,462), undisputed, and if you have sufficient evidence. The electronic procedure is a fast procedure. The court issues an electronic payment order within 30 days. The debtor then has 15 days to pay the debt or lodge an appeal. If the debtor does not lodge an appeal, the order becomes enforceable as a judgment and enforcement can begin. If the debtor lodges an appeal, regular civil proceedings must be started to resolve the case.
Ordinary civil proceedings
If your claim is disputed or exceeds CZK 1,000,000 (€38,462), we may initiate ordinary civil proceedings. If the case is well-documented and undisputed, we can apply for an order for payment without litigation. In that case, the procedure is similar to an electronic payment order procedure. However, since the judicial system in the Czech Republic is not always efficient, it can take years to reach a settlement. If you already have an enforceable judgment, then we can start the enforcement procedure in the Czech Republic.
Is your debtor in an ongoing insolvency procedure? We can pass on your claim and keep you informed of the proceedings. Please note that often only a few creditors are paid out and that the insolvency proceedings sometimes may take several years.
International collection laws
In addition to the Czech collection laws, there are also a number of European measures that can be used when your Czech customer refuses to pay. For the European Union it is important to stimulate trade between European countries. Therefore, complicated procedures abroad are unwanted. In addition to the normal procedures, there are also two alternative procedures that can be used for foreign claims: European Payment Order Procedure and Small Claims Procedure.
Both procedures are relatively quick and cheap. A standard form must be filled in, which is then sent to the competent court. If you have not agreed on anything, this is usually the Czech court. The court then deals with the collection case and makes a judgment.
The small claims procedure is only suitable for small claims up to €5,000. The European Payment Order only applies to undisputed claims.
Litigation in your own country
Have you agreed in the general terms and conditions that the court in your country has jurisdiction? Then legal proceedings can also be started in your country. Depending on your specific situation, our lawyers will look at what is most beneficial for your organisation. If we start legal proceedings in your country against your Czech debtor, we can conduct ordinary civil proceedings. Both parties will be heard, after which the court will make a judgment.
If a verdict has been obtained in your country, this verdict has yet to be executed in the Czech Republic. Within the EU, it is established that all judgments obtained in the EU Member States are also recognised in other EU countries. For the execution of a judgment in the Czech Republic, your court issues a certificate. This is then sent to the bailiff in the Czech Republic together with the judgment. The bailiff can then set to work immediately to ensure that the judgment is executed in the Czech Republic.
In the Czech Republic commercial claims are subject to a statutory limitation period of 3 years. This period starts from the moment the claim is due and payable. This is the due date of the invoice. When the term of payment of an invoice is 30 days, the limitation period of 3 years starts to run after those 30 days have expired.
Suppose you deliver a batch of clothing to a customer. On 1 April 2020, you send the corresponding invoice, with a payment term of 30 days. However, your customer does not pay. The due date of the invoice is 1 May 2020. From this moment on, the limitation period of 3 years starts to run. On 1 May 2023, your invoice is therefore time-barred.
Expectations to the limitation period
The limitation period of 3 years applies to normal business receivables. Please note that the limitation period for some claims is different. For example, transport law throughout Europe has a limitation period of 1 year.
Preventing the statute of limitations for your Czech invoice
You can avoid prescription of your invoice by interrupting the prescription period. In order to interrupt the statute of limitations, the Czech Republic acknowledges two ways:
- A letter from the debtor confirming that there is an outstanding invoice. The limitation period then starts to run again. The claim will then expire 10 years after that.
- A summons, i.e. starting legal proceedings against your debtor.
It is therefore most rewarding to send the writ of summons at the end of the term. But of course, make sure that you do this on time, before the statute of limitations has expired. Otherwise, you risk your invoice being time-barred and you will no longer be able to collect in court.
Legal areas for debt collection in Czech Republic
Our Czech collection desk has been present for several years. During that time, we have helped many companies all over the world with their collection business in the Czech Republic, and assisted several Czech companies with all kinds of debt collection cases in various areas of law:
- Buying and Selling
- Construction law
- Rental and leasing
- Agency and distribution agreement
- Damages and unlawful acts
“Bierens is a highly effective and professional partner. Not only do they have a good debt collection procedure, they also give solid advice.”
Manuel Maas, Eneco
Is your debtor in Prague, Brno or Ostrava? For our specialists, it does not matter where your customer is located. We can assist you throughout the Czech Republic. For the successful collection of your case you do not need to call in a collection agency or lawyer in the Czech Republic. You can simply transfer your case online. Our specialists will then get straight to work.
More than a debt collection agency
If you are looking for a debt collection agency, you are better off with a debt collection lawyer. Our Czech collection lawyers have more resources than a collection agency. Moreover, they work faster and are also more successful. That is beneficial for your organisation as you will quickly have your money in your bank account.
No Win No Fee debt collection
During the extrajudicial phase, we work based on the No Win, No Fee principle. If we do not collect, then you pay no legal fee. You only pay €150 for administrative costs. After all, an unpaid invoice causes enough frustration. We think it would be unfair if you were to be faced with all sorts of additional fees.
You only pay a fee if we can collect the claim. We try to recover this fee from the debtor as much as possible. Therefore, a successful collection case will cost you almost nothing! We call that justice, for you are getting exactly what you are entitled to.
If the collection is successful, we try to recover the collection costs from the debtor as much as possible. In that case your Czech customer will pay the outstanding invoice and the collection costs. This way you will have to pay as little collection costs as possible to our organization.
Do you have an outstanding invoice with a Czech customer that is not paid? Or do you have another conflict with your customer? Our collection specialists and lawyers will be happy to help you solve your payment conflict. Please feel free to contact us for more information. Do you no longer want to wait for your money? Then hand over your invoice immediately. Our specialists will then get straight to work for you.