The moment there is a disagreement or one of the parties does not comply with the agreements, you can take legal action on the basis of the agreement and the general terms and conditions. You do this only at the moment when you yourself cannot come to an agreement with the customer or business partner. You can divide the possible conflicts into two categories: payment conflicts and other conflicts. The payment disputes are covered in this article, the other legal conflicts will be covered in other articles.
Payment disputes are the most common, here the client cannot or will not pay, this can be with reason, because they are not satisfied or without reason. There are customers who simply do not pay and hope they can get away with it.
This kind of situation will happen to every business owner, no matter how good your product or service is, there are always customers who are difficult when it comes to paying. There are things you can do about this yourself and you can outsource this if necessary. We are only talking about payment in arrears, because if the customer pays in advance, you don’t run the risk of non-payment.
What you must do yourself
With every sale you must send an invoice (required by law), you put a certain payment term on it, usually 14 or 30 days. The customer then has that period to pay the amount.
If the invoice is 5 days past due, you send a payment reminder. If you send the invoice digitally, it is advisable to send the reminder on paper. Then you can be sure that, should you have a non-valid email address, the reminder will arrive. If you send the invoice by mail, then send the reminder by mail as well.
You better not mention any threats in the first reminder, stay friendly and request payment again, no mention of a collection agency (Dutch: incassobureau) or anything like that. It is always important to maintain good customer relations and it is possible that the customer has forgotten about it.
In that reminder you also put a deadline, usually about 10 days and after those 10 days you wait another 5 days, if after 15 days there is still no payment you send a reminder.
The reminder is in a more forceful tone with again a period of for example 10 days, here you also mention what happens if payment is not received within the specified period. There will be collection costs (on behalf of the customer) and legal interest will be added (from the day the invoice is due). This is important to mention, because if you don’t and you do call in a collection agency, you could end up paying those costs, because you didn’t tell the customer. This is also put in your general conditions.
What you can do is make another call to the customer if the reminder is not paid. Whether you do this depends on your relationship with the customer. You can also choose to communicate through a collection agency, because then you don’t have to disturb the customer relationship yourself.
So the steps you take yourself are as follows:
- You send an invoice
- You send a payment reminder.
- You send a reminder
- You call the customer if necessary
The important thing here is that you do this consistently; you have to “educate” the customer. It is a proven fact that many customers take the space you give them. If you only send a first reminder after 3 months, customers who buy from you more often will calmly wait 3 months before paying. They know there are no consequences for non-payment anyway.
If the customer has not paid on the basis of these steps, there is not much you can do. You have to summon the customer to appear in court and if the judge rules in your favor then a bailiff can seize the customer’s assets to pay your bill.
This step to court is quite large, especially when it comes to smaller amounts, as an entrepreneur or a corporate lawyer (Dutch: ondernemingsrecht advocaat) you will not so quickly file a lawsuit. However, you can outsource this and this can be done with a collection agency.