When is an invoice legally overdue?

An invoice is overdue once the payment term stated on it or agreed with the customer has passed. Legally relevant is the onset of default — depending on the situation, the day after a calendar-fixed due date, the receipt of the first Mahnung, or at the latest 30 days after invoice receipt and due date for B2B debtors (§ 286 BGB).

How much time should I give the customer before dunning?

Standard practice: 3 to 7 days after due date a friendly nudge (not an official Mahnung), 7 to 14 days later the first written Mahnung, 14 days between each subsequent Mahn level. Shorter reads as aggressive, longer signals you don't mean it. For very large or risky receivables use shorter intervals.

Should I call before the written Mahnung?

With existing B2B relationships almost always. A friendly call on day 3 or 4 after the due date resolves most default cases directly — typical causes like accounts backlog or lost PDF surface immediately. For first orders or unknown debtors, start straight with the written Mahnung.

When is a collection agency worth it?

When the third Mahnung has passed, you don't want to or can't file the court Mahnverfahren yourself, and the receivable is large enough (typically over EUR 1,000) for the 15–35 % success commission to be bearable. For smaller receivables, the court Mahnverfahren on your own is usually cheaper. Important: the debtor only reimburses collection fees under BGH conditions — instruction after default, no obvious insolvency or refusal-to-pay case.

What do I do when the customer says they can't pay?

Three options that usually beat escalation: (1) a written instalment plan with binding dates, (2) an early-payment discount for immediate partial settlement, (3) a written acknowledgement of debt — the debtor signs that the claim exists, and you hold off on further steps. The last one restarts the limitation period and gives you a basis for enforcement without going to court.

Can I just write the invoice off?

Yes, but only after demonstrably exhausting recovery attempts. For tax purposes a receivable can be written off when objective evidence shows it isn't realisable — debtor insolvency, unsuccessful Mahnverfahren, fruitless enforcement. The tax office does not accept a blanket **write off due to stress**. For receivables under EUR 250 net the small-amount flat treatment often applies.

Playbook

Customer not paying — what to do? A seven-step playbook for SMEs in Germany

Kyle Nelson16 June 2026

A non-paying customer is not an emergency — it's a process. This guide walks through the seven steps an SME should take, in order, from the initial sanity check through personal outreach, the structured Mahn sequence, claiming default interest and the statutory flat fee, all the way to the court Mahnverfahren. Pragmatic, escalating — but without damaging the relationship earlier than necessary.

First reaction: before you send anything

The most common failure mode in SME receivables happens in the first ten minutes after spotting an overdue invoice — usually under stress, often by email, sometimes with a tone that damages the customer relationship unnecessarily.

Pause for a moment. An open item is rarely bad faith or an insolvency signal — it's usually a forgotten instruction, a PDF lost in a spam folder, or an internal approval stuck on someone's desk on the customer side. Operators who hold that thought write the first message differently — and tend to get paid faster than those who shoot from the hip.

The seven-step approach below assumes you haven't taken any action yet. If you're already in round two or three, jump to the relevant step.

Step 1: Sanity check — is the invoice really overdue?

Before sending anything to the customer, spend two minutes checking your own side:

Was the invoice actually sent? Sounds trivial; in practice it is the top cause. Bookkeeping software sometimes sets the status to sent automatically without the mail client actually dispatching the email. Check the send log.
Is the recipient address correct? Corporate customers ideally route invoices into a dedicated accounting inbox (rechnung@kunde.de or invoices@). Sending to your contact's personal address makes payment dependent on their vacation schedule and inbox discipline.
Is the due date unambiguous? A payment term like payable within 14 days without a reference date leaves interpretive room. A calendar-fixed due date (payable by 14 July 2026) is unambiguous — and default sets in automatically under § 286 (2) No. 1 BGB.
Is there a legitimate dispute? Complaints, quality issues, discount discussions — if the customer is genuinely contesting part of the invoice, it's a clarification case, not a dunning case. Then dun only the undisputed portion.

Step 2: Personal outreach before the first Mahnung

For B2B customers you work with regularly, a brief personal touch BEFORE the written Mahnung is almost always the faster path to payment — and the only path that keeps the relationship intact.

A pragmatic sequence that works in practice:

Day 1–3 after due date: Short, friendly email to your contact (not the accounts inbox): Hi X, invoice #… from … for EUR … came due last week. Could you let me know where it's at? Thanks.
Day 4–7 without response: Brief phone call, friendly rather than firm. With an accounts backlog you often get a straight answer about when payment will run.
Day 8+ without response or payment: Transition into the structured Mahn sequence (see Step 3).

Step 3: First written Mahnung

The first Mahnung is friendly, short, factual. It names the open invoice, sets a fresh 7-day deadline and notes default on non-payment — but no default interest yet, no dunning fee, no pressure.

Important: even if Step 2 already involved email or phone contact, the first written Mahnung is the legal document that triggers default under § 286 (1) BGB (unless the invoice already carried a calendar-fixed due date). Date and receipt should be documentable.

For the concrete template text and the mandatory elements a valid Mahnung must contain, see our guide on writing a legally durable Mahnung.

Step 4: Escalation — second and third Mahnung

If payment does not arrive after the first Mahnung, tone becomes firmer and consequences become concrete. The second Mahnung itemises default interest for the first time, a dunning fee of EUR 2.50 to EUR 5.00, and — for B2B debtors — the statutory EUR 40 flat fee under § 288 (5) BGB. The third Mahnung announces the court Mahnverfahren.

Three tactical points for the escalation phase:

Set deadlines clearly — and meet them. If the second Mahnung gives a 14-day deadline and you take no action 30 days later, the debtor reads that correctly: that you don't mean it. A short deadline you keep is worth more than a long one you ignore.
Name consequences — and mean them. Announcing the court Mahnverfahren in the third Mahnung means being ready to file it. Empty threats teach the customer to ignore you.
Personal outreach stays useful. Even at stages two and three, a short call in parallel to the written Mahnung is often what triggers payment. Writing for legal effect, personal touch for resolution.

Step 5: Claim default interest and the flat fee

With the onset of default, additional claims arise automatically alongside the principal — most SMEs leave them on the table out of ignorance or paperwork-aversion. In B2B that's a preventable source of margin loss.

Three line items belong in any complete default claim against a B2B debtor:

Default interest under § 288 (2) BGB: base rate + 9 percentage points, accrued daily from default onset. For a EUR 5,000 invoice and 60 days in default, at current rates roughly EUR 100.
Dunning fee from the second Mahnung: EUR 2.50 to EUR 5.00 per Mahnung, flat, no itemised proof needed.
€40 flat fee under § 288 (5) BGB: once per receivable, automatic on default, independent of actual damage. B2B debtors only.

Step 6: Collection partner or court Mahnverfahren

Once the third Mahnung has passed and payment still hasn't arrived, two paths remain — they aren't either/or, often they run sequentially.

Court Mahnverfahren (Mahnbescheid). Standard route for undisputed claims. Filed online via the EDA portal at the competent court; court fees depend on the amount in dispute (around EUR 73 for a EUR 5,000 claim). If the debtor doesn't object, a Vollstreckungsbescheid issues within weeks — a full enforcement title. The debtor bears the costs if they don't pay.

Instructing a collection agency. Faster in execution but expensive, at 15 to 35 percent success commission. Worth it mainly when you don't have capacity for the Mahnverfahren yourself and the receivable is large enough to absorb the commission. Important: BGH case law allows the debtor to be charged collection fees only if instruction came after default onset and the debtor wasn't obviously refusing to pay.

Step 7: Learn from it — fix the root cause

When the receivable is resolved (or has to be written off), the case isn't closed — it's closed-and-to-be-reviewed. The question Why did this invoice go into default? is the most important one an SME can ask at the end of every dunning cycle.

Common causes, all fixable with small setup work:

Customer didn't have the invoice. Fix: use the customer's dedicated invoicing inbox, enable receipt confirmation in your tool.
Due date was ambiguous. Fix: put a concrete date on every invoice instead of a relative payment term — payable by 14 July 2026 beats payable within 14 days both legally and operationally.
Customer had cash flow problems. Fix: segment risky customers earlier (scoring), offer early-payment discounts, agree on instalments or prepayment.
Mahnungen sat on a desk. Fix: automation instead of a monthly manual run.

When automated software takes over the whole process

The seven steps above are manageable for an SME with five to ten open items per month. At twenty or more, dunning becomes a half-day job — and exactly the combination of personal outreach (Step 2), structured sequence (Steps 3–4), and correct calculation (Step 5) suffers under time pressure.

Modern receivables software takes over the sequence turn-key: connects to your billing system (Stripe, Lexoffice, Sevdesk), detects default automatically, drafts the Mahnung in the debtor's language, calculates default interest and the flat fee, escalates via email, SMS, WhatsApp or voice — and, if needed, files the court Mahnverfahren through a BfJ-registered partner.

kvit costs EUR 49 per month plus 4–8 percent on amounts actually recovered — typically a fraction of what ten manual Mahnungen per week cost in internal working time.

Immediate checklist: what to do when the customer hasn't paid

Four minutes from **why hasn't this been paid?** to a documented first action.

Check your own side (2 minutes)Review the invoice send log. Is the recipient address correct? Is the due date calendar-fixed? Is there a dispute? If yes — clarify before dunning.
Personal outreach (10 minutes)With an existing business relationship: short friendly email or call to your contact. Often the item resolves directly — accounts backlog, forgotten instruction, missing approval.
Release the written MahnungIf 7 days after Step 2 produce no response: first written Mahnung with a 7-day deadline. Use the template from the Mahnung guide. Document the dispatch.
Calendar the escalationSchedule the second Mahnung 14 days after dispatch of the first. Never wait longer — a deadline you don't keep teaches the customer to ignore you.

Frequently asked questions

When is an invoice legally overdue?: An invoice is overdue once the payment term stated on it or agreed with the customer has passed. Legally relevant is the onset of default — depending on the situation, the day after a calendar-fixed due date, the receipt of the first Mahnung, or at the latest 30 days after invoice receipt and due date for B2B debtors (§ 286 BGB).
How much time should I give the customer before dunning?: Standard practice: 3 to 7 days after due date a friendly nudge (not an official Mahnung), 7 to 14 days later the first written Mahnung, 14 days between each subsequent Mahn level. Shorter reads as aggressive, longer signals you don't mean it. For very large or risky receivables use shorter intervals.
Should I call before the written Mahnung?: With existing B2B relationships almost always. A friendly call on day 3 or 4 after the due date resolves most default cases directly — typical causes like accounts backlog or lost PDF surface immediately. For first orders or unknown debtors, start straight with the written Mahnung.
When is a collection agency worth it?: When the third Mahnung has passed, you don't want to or can't file the court Mahnverfahren yourself, and the receivable is large enough (typically over EUR 1,000) for the 15–35 % success commission to be bearable. For smaller receivables, the court Mahnverfahren on your own is usually cheaper. Important: the debtor only reimburses collection fees under BGH conditions — instruction after default, no obvious insolvency or refusal-to-pay case.
What do I do when the customer says they can't pay?: Three options that usually beat escalation: (1) a written instalment plan with binding dates, (2) an early-payment discount for immediate partial settlement, (3) a written acknowledgement of debt — the debtor signs that the claim exists, and you hold off on further steps. The last one restarts the limitation period and gives you a basis for enforcement without going to court.
Can I just write the invoice off?: Yes, but only after demonstrably exhausting recovery attempts. For tax purposes a receivable can be written off when objective evidence shows it isn't realisable — debtor insolvency, unsuccessful Mahnverfahren, fruitless enforcement. The tax office does not accept a blanket write off due to stress. For receivables under EUR 250 net the small-amount flat treatment often applies.

When dunning stops eating your half-days

kvit takes over the seven-step sequence automatically — connects to Stripe, Lexoffice or Sevdesk, drafts, escalates, calculates default interest, documents. From EUR 0 per month.

Try kvit free