Unpaid bills: how can I get my overdue bills paid?

Are you trying to get a customer to pay you an outstanding invoice? Knowing that you have a legal period of 2 years in which to claim payment of unpaid invoices is a good start... but it's not enough.

The way in which you handle this situation is very important. While the sums owed to you can have a negative impact on your cash flow, your collection methods influence your customer relations in the longer term.

A one-off oversight or impediment can be the cause of late payment. That's why we recommend that you first resort to amicable debt collection .

This procedure, consisting of reminders by telephone or by written and/or electronic mail , is the first step before taking legal action. A prerequisite for maintaining good relations with your customers!

Find out everything there is to know about unpaid invoices in this article co-written with Charlène Serayet, Managing Director of Dasmind and an expert in administrative management.

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How long does it take to claim an unpaid invoice?

You have 2 years in which to go to court to recover an unpaid bill from an individual.

This period extends to 5 years if the debtor is not a consumer, but an unpaid bill between professionals such as :

• a commercial company
• or a trader.

Once this period has elapsed, the claim becomes statute-barred.

How do I get payment for an unpaid bill?

Here are the 4 steps to follow, which we will then detail methodically:

1. Check that the debt is due,
2. out-of-court reminders
3. formal notice to pay,
4. legal collection proceedings.

A word from the expert

It's important to remember that prevention is always better than cure. Here are a few additional tips:

• Make sure that your general terms and conditions of sale are clear and precise, particularly with regard to payment deadlines and late payment penalties.
• Send your invoices as soon as possible after the service has been provided or the product delivered.
• Follow up your invoices regularly and don't hesitate to follow up your customers as soon as they are late, by phone call for example.
• Offer alternative payment solutions, such as online payment, direct debit or payment in instalments.
• In the event of a dispute, don't hesitate to call in a bailiff or a lawyer. The Rubypayeur solution is also useful for this type of problem.

Charlène Serayet,

1 - Verification of the debt due

First and foremost, check that you have a certain number of elements in your possession before claiming payment from the debtor customer. Make sure you check the amount of the debt due and that the collection deadline has been met, and also that you can prove :

• the debtor's commitment, in the form of an order form, quotation or contract (but not an invoice) to which the general terms and conditions of sale (GTCS) are attached;
• compliant delivery or proper performance of services, which may take the form of a registered letter, a transport company voucher or a delivery note signed by the debtor.

The invoice dunning procedure can combine several methods, from amicable solutions to litigation.

We advise you to use the first procedure first, as it is :

• it's quick and easy to use
• much better perceived by the customer
• more economical.

Let's take a look at the different stages in collecting your unpaid invoices.

2 - Amicable reminders

Reminding customers of unpaid invoices by telephone

🎯 Objective: remind the customer that payment of their invoice is due, while maintaining good customer relations.

We advise you to remind your customer as soon as the invoice is due. There is no strict rule as to which means of communication should be used, and some people will use written correspondence from the outset.

However, there is an advantage to dunning by telephone: thanks to the direct contact, you can "take the temperature" so that you can better prepare the rest of the procedure, and it's easier to judge the customer's sincerity. Don't forget that sometimes an unpaid bill is just an oversight , and that a simple reminder is enough.

In all cases, be sure to use a tone that is both firm and courteous. In this way, you can best preserve your business relationship.

And of course, avoid any aggression, intimidation, blackmail or harassment, all of which are punishable by law.

Reminder of an unpaid invoice by email

🎯 Objective: to warn customers that their debt has fallen due, informing them quickly and simply, and providing them with a written record.

Sending a reminder email can be an approach perceived as less blunt and more diplomatic than a registered letter (especially of an informative nature), and can replace or be added to a telephone reminder.

By sending an email, you can remind people that their payment is overdue more quickly than by letter, and without the cost of postage. This method of communication is both practical and appropriate, because it can be used early enough to resolve an outstanding payment problem as quickly and effectively as possible.

The use of e-mail also has the advantage of providing an initial written record of the request. In the event of legal action, a copy of the e-mail has legal force.

The 1st reminder letter

🎯 Objective: to remind the customer that the invoice payment date has passed, in a formal but informative way.

Next comes the first invoice reminder letter. This is by no means a legal obligation; you are perfectly free to send a letter of formal notice directly.

However, it is customary to first send the customer a reminder letter, which, like the telephone call, serves primarily as a "wake-up call".

That's why this first letter should be informative, and not mention the legal risks involved. Simply restate the facts, i.e. :

• the nature of the invoice
• as well as the amount due and any late payment penalties.

☝️ Don't forget to enclose copies of the outstanding invoices with your reminder. Your debtor may be showing a lack of rigour in his own invoicing management.

The 2nd reminder letter

🎯 Objective: ask for a response to the first reminder, and use a firmer tone.

Despite your first reminder, the customer still hasn't collected their debt? After a period of time that suits you (usually a fortnight), it is customary for a second reminder letter to be sent before the customer is put in default.

However, the tone of this letter should be firmer than the previous one: although the body of the letter will reiterate the same ideas, you should mention your regret at the non-payment of the invoice and any legal action you are considering.

Finally, we recommend that you send this second letter by registered post with acknowledgement of receipt. This change of form signifies to the customer the hardening of your stance.

3 - Formal notice to pay

Still haven't received your payment?

Now is the time to send the customer a third reminder letter, sent by yourself, a lawyer, a debt collection agency or a bailiff.

⚠️. Contrary to popular belief, none of these intermediaries has the power to obtain payment; only a judge can.

What is a formal notice letter?

A formal notice should be seen above all as a preliminary stage to any legal action. While it does not allow you to foreclose, it does make you face up to your responsibilities and the threat of legal action. It is also a prerequisite for the creditor to claim interest on arrears or late payment interest.

Finally, you should be aware that although a simple letter is sufficient, registered post with acknowledgement of receipt is preferable in order to retain proof.

Mandatory information

☝️ Please note that for the letter of formal notice to have the desired legal effect, it must include a number of compulsory details:

• the date sent
• the contact details of the addressee and sender,
• the words "mise en demeure" ("formal notice"),
• the nature of the debtor's obligation,
• the (reasonable) period allowed for payment,
• the consequences of non-payment,
• the sender's signature.

Late payment penalties

▷ According to article L. 441-10 II of the French Commercial Code, the interest rate for late payment penalties in BtoB is equal to the interest rate applied by the European Central Bank to its refinancing operation, plus 10%. As the European Central Bank rate is 0%, the interest rate for late payment penalties is 10%.

Calculation of late payment penalties = (10% × amount of unpaid invoice) × (number of days late ÷ 365).

Sample formal notice letter

Here is a sample letter of formal notice that you can adapt:

4 - Legal collection proceedings

Unfortunately, there are times when amicable collection is not enough to settle unpaid bills, and you will probably have to resort to legal collection proceedings.

For your claim for payment of an unpaid invoice, take note of the following remedies.

Order to pay

After the letter of formal notice, the payment order procedureis the preferred option.

This procedure is :

• quick: it can be done online via the Infogreffe website ;
• inexpensive: for example, the fee is €33.47 on Infogreffe.

What's more, it does not require the debtor to appear. All you need is the evidence you have gathered.

If the judge considers that the creditor's application is valid, the procedure will result in an injunction to pay, which will be sent to the debtor.

Provisional injunction

The interim payment procedure is also quick and inexpensive, and involves obtaining part of the sum claimed within a short period of time.

Once the interim payment order has been made, the customer must fulfil his commitments and settle his debt. If they fail to do so, the creditor can then have the debtor's assets seized by a bailiff and be reimbursed out of the price of their sale, by means of a seizure for sale.

Summons for payment

A summons to pay requires the debtor to appear before the Commercial Court.

The aim is to order the debtor to pay the debt, as well as any damages and interest to compensate for the loss suffered. This procedure may also lead to an enforceable title being obtained, whereby the debt is compulsorily recovered, i.e. the debtor's assets are seized.

A distinction must be made between "summons on the merits", where the judge will rule on all the legal and procedural aspects of the case, and "summons in summary proceedings", where only certain points of the dispute are dealt with as a matter of urgency.

☝️ Note that this procedure is more time-consuming and costly than an injunction to pay. It should be reserved for the most important disputes, if you think, for example, that your customer is going to dispute his debt.

Finally, you can turn to a bailiff at the end of legal proceedings. His role is to find solutions to force your customer to pay you or to obtain the sum to be recovered by other means (seizure of bank account, seizure of property, etc.), if he does not comply with the judge's decisions.

If the sums in question do not exceed €4,000, the bailiff can also initiate a simplified procedure by contacting the customer by registered letter with acknowledgement of receipt. If he accepts, an agreement can be drawn up with your customer on the amount and terms of payment. If the customer does not respond within one month of receiving the registered letter, you will have to take the matter to court.

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Unpaid invoices and accounting

How do you account for the loss?

Depending on the number of reminders sent to customers, unpaid invoices at the end of the financial year must be :

• set aside a provision if the loss is probable but still uncertain,
• or transferred to bad debts if the loss is unavoidable.

Invoicing software to help you

As well as helping you to create your invoices, it also helps you to monitor payments in progress and to take action to douse unpaid invoices, so that you don't have to resort to a debt collection platform, which will charge fees on the sums paid.

Here are a few examples of solutions:

• Axonaut enables you to quickly identify unpaid invoices by automatically sending a notification as soon as an invoice is due.
  • With the reminder function, a pre-filled letter is generated and then sent by e-mail or by post, as the solution is connected to its servers, saving a great deal of time.
  • Finally, the ability to pay online via a customer portal, by credit card (Stripe) or direct debit (GoCardless), reduces the risk of non-payment.
• INFast allows you to monitor the due dates of your quotes and invoices in real time, and to set up your letters and reminder deadlines.
  • It also has an integrated online payment option to reduce the risk of non-payment.
  • As soon as the invoice or reminder is sent, the customer is notified by an email containing a direct link to the invoice and online payment.
  • You will receive confirmation of receipt of payment.
• Sellsy Invoicing saves you precious time by automating your collection procedures and alert systems.
  • By creating reminder scenarios, you can customise the procedure according to the invoice due date (simple e-mail, formal notice, etc.).
  • A tracking system lets you know whether your reminder emails have been read by the customer.
  • Speed up the process with online invoice payment via Atos, Stripe, PayPal or GoCardless.

What about a credit management strategy?

Finally, you can save yourself a lot of billing headaches by implementing a credit management strategy.

Among other things, this involves :

• defining acceptable payment terms and penalty clauses ;
• checking the creditworthiness of your customers in the case of large invoices.

In short, it's about prevention before cure!