Whether you are an entrepreneur, a founder of a small business or an employee of a large corporation, an unpaid invoice can affect your business. If you are confronted with this situation, you will have to find a solution to recover the amount due. In most cases, you will have to start a collection procedure, which includes several steps to be taken in order to obtain payment of the debt.
Amicable collection: the steps before the formal notice
Following an unpaid invoice, it is preferable to attempt an amicable collection. This will allow you to maintain a healthy relationship with your customers and not to involve the courts too early in the process. Here are the steps in the case of an amicable collection:
- The contact with your customer. First of all, contact your debtor to inform him of the situation. This will allow you to establish a dialogue and explain to your interlocutor his obligation to pay. Do not hesitate to use e-mail, which will allow you to keep a written record of your exchanges. Nevertheless, even if unpaid invoices have a negative impact on your business, do not put pressure on your customer. You cannot legally threaten, verbally abuse or harass your customer by calling them repeatedly. This is criminally punishable and could quickly land you in court.
- The dunning letter. If you have tried to contact your debtor several times and by different means and he remains unreachable, you can use a dunning letter. This letter will indicate to your contact person that he/she has unpaid bills. You should also specify how long the situation has lasted. Copies of the invoice can be attached to the document sent. If your customer does not reply to this letter, you can write a second one and make a new friendly reminder. If, despite your reminders, your customer still ignores you, you will have to proceed to the next step: a formal notice.
Unpaid invoice: formal notice
If the amicable reminder did not work, the last step of the amicable collection is the formal notice. This involves sending a letter with acknowledgement of receipt which will represent a final payment order. On this letter, certain information must appear in order to be legally admissible. Indeed, your letter must clearly explain the situation in order to be considered as a formal notice. You will need to :
- Remind the debtor of his obligation
- Tell your customer how much time he or she has been given to pay outstanding invoices
- Specify to your debtor the legal consequences. This last precision will be essential if you wish to take legal action later on
Within the framework of a debt collection, this formal notice will have a judicial value contrary to the reminder letters. It is this document that will officially establish the delay in payment. It is also only after this document has been sent that you can claim damages and initiate a judicial recovery. Do not hesitate to launch your collection procedures online and delegate the formal notice stage.
Judicial recovery
You will have three options for debt collection:
- The order to pay : This is the most widely used approach because of its speed and low cost. You will have to file your order to pay with the competent court. You will have to argue your request with a copy of the invoice, the formal notice or a purchase order. The judge will then decide whether to reject your request or to accept it. If he accepts it, it may be a partial or total acceptance. In the former case, the judge will order the collection of only a portion of the unpaid invoice. In the latter case, the debtor will be asked to pay the entire amount. The debtor does not need to be present.
- The provisional summary judgement. This method is adopted when a quick recovery is desired. It is particularly used when the non-payment of an invoice jeopardizes the financial future of the company. The only rule to be able to resort to it is that the debt must not be seriously contestable. You must therefore be in possession of contracts or purchase orders. Contrary to the injunction to pay procedure, the creditor and the debtor must be present during the deliberation.
- The summons for payment. The summons for payment will require a classic trial. You can use it as a last resort because this procedure is long and expensive. It is mainly used if neither the summary proceedings nor the summons to pay have worked. The judge will make his decision following the arguments of both parties.
Easier recovery
To make the collection process easier, you can do it online. This will give you the opportunity to delegate most of the steps and ensure that professionals handle each procedure. Online collection can preserve part of your relationship with your customer.
This type of recovery often offers pay-for-results. This means that you will not have to spend money if the results are not there. This method will allow you to follow the progress of your collection step by step and to entrust your unpaid invoice to professionals.
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The rules to know by Economie.gouv : https://www.economie.gouv.fr/dgccrf/Publications/Vie-pratique/Fiches-pratiques/recouvrement-creances