Sometimes, a company might have performed a service - which can either be a product delivery or a service performance - and is not paid for it afterwards. In this case, companies use dunning proceedings with various escalation levels. Dunning proceedings aim to ensure payment by the defaulting debtor as fast as possible. The preconditions for dunning proceedings include, in particular, that a company has performed a service which is not contentious and for which the debtor has failed to pay so far, in spite of the overdue claim and the issuing of an invoice.
The so-called commercial dunning procedure forms the first step. It starts with a reminder or a dunning letter. This is a clear request for the debtor to pay the outstanding invoice. The reminder includes the due amount, the respective date, the invoice number to which the dunning procedure relates, the payment term, and the account to which the due amount is to be paid. There is no legally required form for a reminder. However, in most cases, it is provided in writing. Many consumers believe that three reminders have to be sent. But there is no legal obligation to warn a defaulting debtor three times in writing even though this has become common practice in business transactions. Companies usually send three reminders expressing different levels of urgency during the dunning procedure even though they are not required to do so by the legislator.
If a debtor does not respond to the first reminder and if the account remains open, the creditor has the right to forward the case to a collection company. arvato Financial Solutions also offers its partners this service. So, if you have received a letter from us, your original business partner has probably already sent you a reminder.
In other words, commissioning a collection service provider constitutes the next level of the collection procedure. The service provider will then contact the debtor in writing or via phone and try to conclude a payment agreement. The collection company aims to conclude the out-of-court dunning procedure successfully and to recover the outstanding account. In the interest of the creditor and of the debtor, court dunning proceedings - the final escalation level - should be avoided, since they cost time and money.
You default if you do not settle an account which has fallen due. This does not always require a reminder. If the invoice or the contract specifies a payment term, the default starts upon the expiry of this deadline if the invoice is not paid. The debtor defaults, at the latest, 30 days after the claim has fallen due and the invoice has been received. However, this fact has to be specifically pointed out to consumers in the invoice. If the debtor receives a reminder at an earlier time, the default begins as of this time.
Costs are incurred during a commercial dunning procedure. Under the applicable law (sections 280 and 286 BGB), the debtor must reimburse the so-called default damages to the creditor. These costs also include collection costs. The default damages consist of collection costs, which are caused by the collection of the claim, and default interest. Moreover, all other dunning costs incurred by the creditor as of the beginning of the default also have to be assumed by the debtor in the end. This also applies to the judicial dunning proceedings, unless this is prevented by a payment in time.
Especially in view of the costs involved, it is important for the debtor to stop the dunning procedure as soon as possible and to prevent any further escalation. To this end, the collection service provider commissioned by the creditor has to be contacted to sort out any open questions and to negotiate a repayment plan. Persistent silence is the worst possible strategy here. If you find yourself in this situation, do not hesitate to contact us. If you receive a payment request from us, you should first check whether the claim we have asserted still applies or whether it has already been settled by you. Moreover, to stop the commercial dunning procedure you should also address your payment to us rather than to your original business partner in the transaction. If you have questions regarding an open account, you can find further information at paigo.com. Moreover, you can contact us in writing or via phone under the phone number indicated in our letter.