Default interest and dunning

In short: If someone does not pay an invoice that is due, the creditor can send reminders and, once in default, demand interest and costs.

In more detail: Default occurs after a reminder, with a fixed calendar deadline or 30 days after receipt of the invoice (for consumers only if they were told about this consequence). The statutory interest is five percentage points above the base rate for consumers and nine for business-to-business dealings (B2B). In B2B, a €40 flat fee is added (§ 288 BGB).

Our context: For overdue invoices the invoice generator drafts a payment reminder and dunning letters (1st, 2nd, 3rd) and calculates the interest. The base rate is an editable value to check against the Bundesbank. This is a draft, not legal advice.

In Depth

Not legal advice.

• Due date: A claim is due when the creditor may demand it, often at the payment term on the invoice.
• Reminder: A request for payment after the due date. Some invoices already contain a fixed deadline, in which case no reminder is needed.
• Sequence: friendly payment reminder, first dunning letter, second dunning letter with deadline and note on costs, final letter announcing court dunning proceedings.
• Dunning costs: Only actual, reasonable costs may be claimed.
• Court dunning proceedings: Online via the dunning portal, cheaper than a lawsuit if the debtor does not object.
• Limitation: Claims usually expire three years after the end of the year in which they arose.

See also: Cash discount (Skonto), Writing an invoice (mandatory details under § 14 UStG)