Want to send a debtor a final reminder? Use our free example
With a final reminder you inform your customer that there is an outstanding invoice that must be paid immediately. For example, an invoice for delivered goods may be overdue or payment is delayed for no communicated reason.
A final reminder often follows a payment reminder, in which the debtor is kindly reminded of the outstanding payment. The tone of a final reminder is usually more business-like and firmer. In the final reminder, a final term is given to the debtor to pay the outstanding debt.
When should you send a final reminder?
A final reminder is sent when the outstanding invoice has still not been paid even after sending an initial payment reminder. We advise you to always send a friendly payment reminder if an invoice is not paid within the outlined payment terms. The final reminder needs to be clear and state that if payment is not made, you will hand the claim over to a debt collection agency. Also indicate that any additional costs will be charged to the debtor.
How many reminders should you send before you engage a debt collection agency?
When it comes to commercial debtors, there are usually no legal rules governing the number of reminders you have to send. In principle, you may immediately call in a debt collection agency or a debt collection lawyer. We just do not recommend this. It is always better to contact your debtor first before over the debt for collection. This way you are more likely to keep your business relationship intact.
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Final reminder without sending a first reminder
Would you like to immediately send a final payment reminder without sending a first payment reminder? When it comes to corporate debtors, this is no problem. You can even transfer the debt collection immediately if the agreed payment term has not been met. However, we do not advise you to call in a debt collection agency or immediately send a final reminder.
Our advice is to first send a friendly payment reminder. If this has no effect, then you should send a final reminder, stating that you will be handing over the debt to a collection agency if no payment is made. You should also indicate that the costs of this will be added to the debt and charged to the debtor.
In most cases, the debtor will make a payment once they have received an initial payment reminder or final payment reminder. If neither of these reminders have the desired effect, it is wise to call in a debt collection specialist and transfer your claim for collection.
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Never send a first or second payment reminder!
When it comes to overdue business invoices, you can send as many payment reminders as you wish. So, what do we mean? You should not mention ‘first payment reminder’ or ‘second payment reminder’ on the letter of formal notice. When you add 'first reminder' to the letter, your debtor knows that further reminders will undoubtedly follow. Why else would you put this on the letter? For some debtors this suggests they can sit back for a while as the debt collection process hasn’t started yet.
Make sure that debtors take your letter seriously, and do not mention the number of letters involved. Unless it concerns the final reminder. Stating final reminder is highly recommendable. This way, your debtor knows that you are serious: no payment will result in a debt collection lawyer or collection agency being called in.
What should be included in a final payment reminder?
The purpose of a final payment reminder is to ensure that payment is made as quickly as possible. It is therefore important to send a clear letter that ensures that your customer will immediately pay. Therefore, it is important to make sure that the following topics are included in the final payment reminder:
Let them know that payment has not been made
It must be clear to the debtor what the purpose of the final payment reminder is: there is an outstanding invoice and it must be paid as soon as possible. This way, your customer knows immediately what is expected of them.
Refer to the unpaid invoice
A clear final payment reminder should also indicate which outstanding invoice is involved. You should also include what products or services have been delivered, the invoice number, the invoice amount and the due date of this invoice. The clearer the reminder, the more likely it is that your debtor will pay the invoice quickly. After all, it saves a lot of time and research for your debtor, so they know which invoice has not been paid.
Include all costs
What is the outstanding amount to be paid? In addition to the outstanding invoice amount, have any additional costs been incurred, such as interest and collection costs? Please state these clearly on the reminder.
Which account should the money be transferred to?
Again: make it easy for your customer and indicate to them which account number the money needs to be transferred to.
Specify a concrete payment term
Let your debtor know when the outstanding amount has to be paid. It is important to be as concrete as possible. It is therefore always better to indicate a specific date instead of "payment within 7 days". In order to get paid quickly however, we advise you to stick to a payment term of 5 days for business debtors, but you are of course free to use a longer or shorter term.
Clearly state the consequences of late payment
What happens if the final payment reminder is not complied with? Identifying the consequences is not only important to create clarity for your debtor, it can also often ensure that an invoice is actually paid. Communicating to the debtor that in the event of late payment, the debt will be transferred for collection to a debt collection lawyer or collection agency, and that those costs will be charged to the debtor, will usually convince many debtors to make the payment. Do you have a long-term relationship with your debtor, and do you still have to deliver goods, for example? Then you can also suspend your obligations. To clarify, you do not start delivering again until the outstanding invoices have been paid.
Calculating late payment costs
An outstanding invoice not only causes a lot of frustration, it also brings you extra work to get the invoice paid. And that costs money. You may charge these costs to the debtor.
Late payment costs for business debtors
We advise you to specify the reminder costs in your general terms and conditions in advance. Our advice is to include at least 15% costs with a minimum of €250, and 1% interest per month. 15% for collection costs is a very common percentage for commercial receivables. Make sure that this is stated correctly in your terms and conditions. Of course, we can always check whether this provision has been included correctly in your general terms and conditions.
In addition, it is of course important that you use the general terms and conditions correctly. If you don’t, you run the risk of your general terms and conditions not being valid. If your terms and conditions are not valid, you will not be able to fall back onto any agreements previously made, such as late payment costs, which should be outlined within your general terms and conditions. This can often go wrong in practice. Make sure that this does not happen to you and read our tips for using general terms and conditions.
Is a final payment reminder by e-mail legally valid?
Our advice is to always send a written reminder. You should always try to call your debtor first to ask why the payment has not yet been made. Hopefully this has the desired effect, so a payment reminder will not be necessary.
But if a telephone reminder has not led to a payment, we advise you to send a written reminder. Send a clear payment reminder where you inform the debtor that there is an outstanding invoice that still needs to be paid. It is also important to send a payment reminder in case the debt ever leads to legal proceedings. You will then have proof of your efforts you have already made to receive your payment.
What language should you send your payment reminder in?
Are you sending a standard payment reminder to your foreign debtor? Don't. The clearer the payment reminder, the more likely it is to be paid. For international debtors it is therefore important that the payment reminder is sent in a language that the debtor understands. If you conduct business in English, an English reminder should be sent.
But it is even better to send a reminder in the debtor's own language. A final payment reminder in German, for example, is much more effective if you have a German debtor. In our experience, debtors are much more likely to pay if the letter is sent in their own language. So, take advantage of this if you have debtors abroad!
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