Check first: is the claim ready for the next step?
The final reminder has been sent, the deadline has passed, the money has not arrived. Before escalating, check five points, because every further step costs money and is hard to undo:
- Has the invoice been received and is the customer in default? Under German law default arises through a reminder after the due date, without a reminder if the payment date is fixed by calendar, and at the latest 30 days after the due date and receipt of the invoice. Towards consumers the 30-day rule applies only if the invoice says so.
- Are there objections? An open complaint, a dispute about the service or a credit note that was never booked should be settled before a third party sends reminders.
- Has the payment perhaps already arrived? Transfers with unclear references easily remain unmatched. Automatic payment matching stops you from handing a paid invoice to collection.
- Is the address correct? Court payment orders and collection fail on an outdated address.
- Is it worth it? For very small amounts, fees and your own time quickly exceed the claim.
How the stages before this point are structured is described in the guide on dunning levels. This guide is about what comes afterwards.
Option 1: payment arrangement and instalments
The cheapest route after the final reminder is often a phone call. Many customers do not pay because they cannot right now, not because they refuse. An instalment agreement then secures the claim and keeps the business relationship.
Put the agreement in writing: total amount, instalments, dates and an acceleration clause under which the whole balance falls due if one instalment is missed. An express acknowledgement of the debt restarts the limitation period and removes later objections. While instalments are being paid, pause dunning for this customer.
Option 2: handover to a debt collection agency
A collection agency sends reminders in its own name, calls, negotiates instalments and takes over the communication. That relieves you and raises the pressure, because the customer sees that the claim has left your company.
On costs: collection costs are in principle damages for default that the debtor has to reimburse. Their amount is capped by law and follows the fees a lawyer could charge for the same work; for small claims and consumers additional limits apply. If the debtor does not pay, whether you owe the agency anything yourself depends on your contract with it. Read that contract before the first handover.
Two limits are worth knowing: a collection agency cannot create an enforceable title; that takes the court dunning procedure or a lawsuit, which many agencies offer through partner lawyers. And the agency must be registered as a collection service provider, which can be checked in the German register of legal service providers.
Option 3: court dunning procedure with a payment order
The court dunning procedure (gerichtliches Mahnverfahren) is the quick route to a title for undisputed claims. You apply for the payment order online at the central dunning court of your federal state; no reasoning is required and the court does not examine the claim on its merits. The steps:
- Payment order (Mahnbescheid): the court serves it on the debtor, who has two weeks to pay or file an objection.
- Enforcement order (Vollstreckungsbescheid): if no objection is filed, you apply for the enforcement order within six months. The debtor may appeal within two weeks.
- Enforcement: without an appeal you hold a title that is enforceable for 30 years. A bailiff seizes assets, you can have bank accounts garnished or demand a statement of assets.
- If the debtor objects: on request the case is transferred to the competent trial court and continues like a lawsuit.
The court fee for the payment order is half a fee based on the amount in dispute, a low two-digit sum for small claims, and belongs to the costs the debtor has to reimburse. Without an objection the procedure usually takes a few weeks. A lawyer is not required.
Option 4: lawsuit
If the customer disputes the claim, only a lawsuit leads further, either directly or after the objection in the dunning procedure. Up to EUR 5,000 the local court (Amtsgericht) is competent; above that the regional court (Landgericht), where a lawyer is mandatory.
Expect court fees and lawyer’s fees based on the amount in dispute, borne by the losing side, and a duration of several months. A lawsuit is only worthwhile with evidence: order or contract, delivery note or acceptance, invoice, the reminders and the correspondence. A complete dunning history is worth real money here.
Keep the limitation period in view
The regular limitation period in Germany is three years. It starts at the end of the year in which the claim arose and you knew about it. An invoice from May 2026 therefore becomes time-barred at the end of 31 December 2029.
Important: further reminders do not suspend the limitation period, and neither does handover to a collection agency. It is suspended by service of a court payment order or by filing a lawsuit. It restarts when the debtor acknowledges the claim, for example through a part payment or an instalment agreement. If you want to carry an older claim past the year end, apply for the payment order in December instead of writing a fourth reminder.
How to decide: rules of thumb by amount and situation
- Small amounts, roughly below EUR 100 to 200: payment order only if the address is certain; otherwise collection or write-off. A court case does not pay.
- Undisputed claim, address certain: apply for the payment order yourself. Fast, cheap, no lawyer.
- Disputed claim: organise the evidence first, then sue with a lawyer. A payment order would end up in the trial court after the objection anyway.
- Customer wants to pay but cannot: instalment agreement with acknowledgement.
- Customer is insolvent: file the claim with the insolvency administrator; every other step is barred.
- Customer cannot be reached: clarify the address via the residents’ registration office or the commercial register, then apply for the payment order; in parallel, collection with address tracing.
Closing a bad debt properly
If everything fails, write the receivable off. Document the collection attempts, because for an uncollectible claim you may correct the VAT you paid, and the tax office asks for evidence. Put the customer on advance payment for future orders. The bad debt rate feeds into your accounts receivable KPIs and shows whether the stages before this point run too long.
How acucollect supports the transition
In acucollect, the receivables management software by RLOX (product page in German), the final dunning level is where internal dunning ends and the decision on the next step is due:
- The final reminder announces the handover to collection or the court dunning procedure with a date.
- Receivables can be handed to a collection agency directly from the software, with the complete dunning history, deadlines and fees as evidence.
- A dunning block per customer pauses the sequence during an instalment agreement or complaint.
- Payments that arrive during clarification are matched automatically so that no paid amount is pursued.
The process before this point is described in the guide on the dunning run.
