How to write a payment reminder in Germany

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  1. Introduction
  2. What is a payment reminder?
  3. When should you send a payment reminder?
  4. What is the difference between a dunning letter and a payment reminder?
  5. Can you send a dunning letter instead of a payment reminder?
  6. How do you write a payment reminder?
    1. What should a payment reminder contain?
  7. Do you need to set a deadline in the payment reminder?

A payment reminder is an important tool companies use to help ensure that they receive their payments on time. Below, you will learn what a payment reminder is, when you should send one, how it differs from a dunning letter and the right way to compose one. We've also included a payment reminder template that you can use.

What's in this article?

  • What is a payment reminder?
  • When should you send a payment reminder?
  • What is the difference between a dunning letter and a payment reminder?
  • Can you send a dunning letter instead of a payment reminder?
  • How do you write a payment reminder?
  • Do you need to set a deadline in the payment reminder?

What is a payment reminder?

A payment reminder is a letter that companies send to their customers to remind them that an invoice has not yet been paid and the payment due date has now passed. You should already have issued a valid invoice that clearly shows the payment due date. For private individuals, the statutory term, or deadline, is 30 days—unless a different term is agreed upon between you and the customer. For business with other companies (i.e., business-to-business, or B2B) the payment deadline stated on the invoice, or as otherwise agreed, will apply. If no payment deadline has been established, the statutory payment term under the German Civil Code (Bürgerliches Gesetzbuch, or BGB) will apply here, too. The basic rule is that an invoice is due upon receipt.

When should you send a payment reminder?

A payment reminder should be sent after the payment deadline has passed. This is the first step in the process of collecting outstanding invoices. However, note that it takes a certain amount of time for payments to be processed, so wait for two to three days instead of sending the payment reminder on the day after the deadline passes. You should give customers a bit of flexibility; in most cases, customers will have simply forgotten the payment.

Regularly checking outstanding invoices and promptly sending payment reminders can help ensure that outstanding payments are settled faster. Further steps, such as sending dunning letters or even approaching collection agencies, should only be considered if payment reminders receive no response.

What is the difference between a dunning letter and a payment reminder?

Payment reminders and dunning letters differ from both a legal perspective and in terms of their content: a payment reminder is often sent soon after the payment deadline passes. It has no legal basis and no formal requirements. There is no obligation to send a payment reminder. However, it is the more amicable way to raise the issue of an outstanding invoice, rather than sending a dunning letter first.

In comparison, a dunning letter sends a much stronger signal and is more serious than a payment reminder. The dunning letter may be sent after a payment reminder has gone unnoticed. It must obey certain formal requirements and contain certain key points, including a deadline by which the outstanding amount must be paid. According to the BGB, customers are in default if they fail to make payment by the deadline set in the dunning letter. In such cases, section 286 of the BGB addresses default on the part of the debtor. This default is generally followed by a legal dunning process.

In terms of costs, you should not demand any extra fees in the payment reminder, as it is a voluntary, amicable notice to customers. By contrast, a dunning letter may ask for dunning fees. However, these fees may not exceed the costs that the company has incurred due to the dunning letter, such as paper, envelopes and postage. It is not permissible to count personnel costs under such expenses.

Can you send a dunning letter instead of a payment reminder?

A dunning letter is not the first step companies should take if a payment is going to be late. It is preferable to send customers a payment reminder first. The payment reminder is a gentle way of giving notice to customers that their invoice is still outstanding. A payment reminder can also help customers remember the deadline, thereby increasing the chances that the invoice will be paid on time. This also gives the customer another chance to pay their invoice without incurring additional dunning costs.

In addition to avoiding unnecessary costs, a payment reminder can also help maintain customer relationships. If the customer still fails to respond and makes no contact, it may be necessary to send a dunning letter once a suitable period of time has passed. However, you should ensure that you observe the statutory requirements for drafting a dunning letter, and you must also respect the payment reminder deadline that's been set.

How do you write a payment reminder?

Try to word a payment reminder in a polite and friendly manner. You will also want to clearly state their outstanding payment required and offer to help resolve any potential obstacles to payment. You can also provide a brief summary of the outstanding items and amounts due and invite them to respond with a specific date or course of action – or request that they simply make the payment.

Note the following best practices:

  • Start with a polite greeting.
  • Be brief and to the point regarding the status of the invoice.
  • State that you would welcome prompt payment, and provide information about the possible consequences of non-payment.
  • Tell the customer that they may contact you if they have any questions or concerns.

It is also important to choose your words carefully, steering away from anything that might sound unprofessional or threatening. Avoid words such as "urgent" or "immediately"; use words such as "prompt" or "timely" instead. You should also avoid blaming or insulting your customers. Keep the focus on the status of the invoice in question and make constructive proposals for resolving the situation, so as not to jeopardise the customer relationship.

Ideally, a payment reminder should leave customers feeling appreciated and that you are eager to help them. However, if you do not get any response, or if the customer remains in arrears, you may have to take further measures and start legal proceedings.

We have created a payment reminder template to help you compose your own payment reminder.

What should a payment reminder contain?

There are no formal requirements for what should be included in a payment reminder, but it should contain all the key information that would help the recipient trace the invoice in question and facilitate prompt payment. The wording should be clear as well.

Typically, it should state the customer's address, the company's address and the company's contact details. It should also include the relevant legal information, such as the company's tax number or commercial register number. State precisely which invoice you mean – including the invoice number, the invoice date and the associated delivery or order. The payment reminder should also set a new payment deadline and show the amount of the payment being requested. You can also enclose a copy of the original invoice, which will let customers know exactly which invoice you are talking about.

Here's an overview of recommended information to include in a payment reminder:

  • The heading "Payment reminder"
  • Customer's data
  • Company's data
  • Original invoice number
  • Original invoice date
  • Legal information in relation to the company (e.g. the company's tax number)
  • Reminder of the invoice amount
  • Delivery and service period as stated in the original invoice
  • Reminder that payment is still outstanding
  • New payment deadline
  • The company's bank details

Do you need to set a deadline in the payment reminder?

Companies should set a deadline in the payment reminder. This is important as it reminds customers of their payment obligations and encourages them to arrange prompt payment of the outstanding invoice. This kind of deadline makes the timeline clear and shows customers that your company values receiving payments on time. However, there are no statutory requirements for stating deadlines in a payment reminder. It is up to the company to communicate the new deadline.

The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accurateness, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent attorney or accountant licensed to practice in your jurisdiction for advice on your particular situation.

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