What is a final reminder

If a customer does not pay for an item or service despite the services having been rendered, a company will hand the transaction over to its dunning department. The debtor is then prompted to fulfil his obligation with several reminders. This commercial dunning procedure usually ends with an unambiguous letter: the final reminder. This gives the debtor one last opportunity to pay his/her invoice before the company takes further action, which may have unpleasant consequences for the debtor. The final reminder is therefore in the customer's interest. 

Final reminder- a service for the customer

Within the commercial dunning process, it has become common practice to send three dunning reminders to a defaulting customer to remind him/her of his/her obligation. The third is also the final reminder. However, on the part of the companies, this procedure is merely a courtesy and service to the customer. It is not a legal requirement to send three dunning reminders or one final reminder before initiating any further action. Whether a company has the right to appoint a debt collection agency or to effect a legal dunning procedure mainly depends on the default in payment. 

The final reminder and default in payment

Default in payment arises when a justified receivable is due and is not settled within the applicable payment term. Specifically, this means that no (last) dunning reminder is required to put a debtor into default. If a specific payment term was agreed on, the default arises once the deadline expires and the receivable is still outstanding. If no explicit deadline has been agreed on, a period of 30 days shall apply from the date on which the customer received the service and the invoice. However, this fact needs to be pointed out to him. In these instances, no additional payment reminder, let alone a final reminder, is required. If an invoice, based on a justified receivable, is due and the debtor has not yet paid, a company may also send a first dunning letter prior to the expiry of 30 days. This then puts the debtor into default. As such, if there is a final reminder, the debtor is already in default of payment at this time.

Costs of a final reminder

The question of default also plays a decisive role in the dunning costs. If default in payment starts with the first reminder, no costs may be imposed for this. However, flat-rate costs of up to five euros are common for the second dunning letter, and always for the final reminder; these costs also stand up in court. Generally speaking, the debtor must compensate the creditor for the damages caused by default. This includes the costs incurred by appointing a collection agency or lawyer. 

The final reminder - what does it contain?

The final reminder is an opportunity to clear things up, which debtors should do their best not to miss out on. There is no fixed form for a final reminder. As with any dunning, a final reminder will contain the respective date, due date, names and addresses of creditor and debtor, the (original) invoice number, and a final payment term. Generally, the final reminder also explicitly states that further action will be taken if due payment is not received by the designated date. The final reminder also details the principal claim and dunning costs. 

What happens after the final reminder?

There is no legal regulation stating that a company must send a total of three reminders to a defaulting debtor. In this respect, the final out-of-court reminder is not a prerequisite for initiating further action. The company is entitled to do so as soon as the debtor is in default and does not respond to dunning. These measures include the legal dunning procedure, through which the creditor acquires an enforceable title. Alternatively, the creditor may first appoint a collection service provider to recover the due receivable. It is merely out of goodwill that many companies send a third and final reminder prior to this. 

Final reminder from the collection agency

If you have received post from our collection agency, Paigo GmbH, it is very likely that you have already been dunned by your original business partner and may have even received a clear final reminder. If you have not done so yet, you should contact us to prevent further escalation and save yourself a legal dunning procedure. Please use the contact forms on paigo.com or the telephone number indicated on your letter.