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Contracts: What to do when your client doesn’t pay?

Publication date: 13 June 2017
5 steps you can take when your client doesn’t pay!

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Sooner or later, almost all companies will have to deal with it: a client who does not pay. Which 5 steps can you take to collect your claim?

Step 1: Contact your client

First of all, it is useful to send the debtor one or more payment reminders. After all, he might have simply forgotten the invoice or never received it.

If the client indicates that he cannot satisfy the claim at once, you can enter into a payment arrangement including an arrangement that the debt will be paid by instalments.

Step 2: Send a demand letter

When the client still does not pay despite the reminders, he must be sent a demand letter. By this letter the client will be urged to pay the amount due (including interest) within 15 days of the receipt of the letter. In addition, he is notified that if he does not comply with the request to pay, he will also be charged the (extra-) judicial collection costs. It is advisable to send the letter both via regular post and by registered post so that you will know and be able to prove that the letter has been received.

If you still have not received payment after 15 days, it is advisable to send a second demand letter. It sets out that the client will be summoned if immediate payment is not made and that the legal costs will also be charged to the debtor.

Step 3: Right of reclamation, right of retention, right of suspension

To exert pressure on the client, under certain conditions you can invoke a number of rights, such as:

  • Right of reclamation
  • Right of retention
  • Right of suspension

If you sell goods, you can reclaim the goods sold to the debtor by invoking the right of reclamation. The right of retention means you retain a good of the client until the invoice will be paid.  If you have obligations against your client yourself, you can suspend them until the invoice will be paid.

Step 4: File for bankruptcy

To make the debtor pay, you can file for bankruptcy (or announce to do so). Generally, the debtor will be likely to do everything he can to prevent bankruptcy and will therefore feel compelled to pay. An application for bankruptcy requires that another creditor also has a claim.

Step 5: Go to court

When the client still doesn’t pay, you can go to court. This involves a number of aspects:

Prejudgment attachment

In prejudgment attachment the assets or goods of the debtor are attached. This is to prevent the debtor from channelling away his assets during the proceedings so that nothing will remain for the payment of your claim. You can also immediately start proceedings on the merit, but then you will run the risk of being left empty-handed despite a positive decision.

In addition, prejudgment attachment can be used to exert pressure to make the client pay after all. The fact is that he cannot access the attached assets or goods and will probably want them back at his disposal as soon as possible.

Attachment can be levied on bank balances but also on wages and benefits.

Initiating proceedings on the merits

After the attachment you will have to initiate proceedings on the merits within a term to be determined by the judge (usually within 14 days). This is done by issuing a summons against the debtor. If the court will grant the claim, the prejudgment attachment will turn into an attachment under a warrant of execution.

Attachment under a warrant of execution

With a decision granting the claim, the bailiff can levy execution on the assets or goods of the debtor. With the proceeds – possibly after the sale by execution of the attached goods – your claim can be (partially) settled.

What can we do for you?

You can contact Russell Advocaten with all your collection matters. We will gladly help you assess how to effectively approach your debtor to incite payment. We can then initiate the collection process and ensure that it runs smoothly.  Please contact us:

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