Premier Debt Collection in The Netherlands

Step 1: Prepare Your Case for Dutch Debt Collection

The first step in the debt collection process in the Netherlands is to ensure that your case is well-prepared and adheres to legal standards. This preparation is crucial for a successful recovery of your claim.

1.1 Verify the Validity of Payment Terms Under Dutch Law

Before proceeding with debt recovery, it's essential to confirm that the payment term you've set is legally valid and that the due date has passed. The payment terms are not just contractual obligations but are also regulated under Dutch law, and different rules apply based on the type of invoice.

• B2B Invoices: For business-to-business transactions, the standard payment term under Dutch law is 30 days. However, there is flexibility for businesses to mutually agree on a different duration. It's important to note that these terms cannot exceed 60 days, a limit set by the European Directive for combating late payment in business dealings.
• Public Authorities: In cases where your invoices are issued to Dutch public authorities, they are required to make payments within 30 days of the invoice receipt.
• Consumer Invoices: The approach for consumer invoices differs significantly from B2B invoices. There is no predefined statutory payment term for consumer invoices in the Netherlands. Businesses are at liberty to set reasonable payment periods. A 14-day term is generally considered reasonable and standard. For effective enforceability, these terms should be clearly outlined in the contract or general conditions of sale.

By ensuring your payment terms are in line with Dutch regulations, you lay a solid foundation for the subsequent steps in the debt collection process

1.2 Statute of Limitations - Check the Expiration of the Invoice

Understanding the statute of limitations on invoices is a crucial aspect of debt collection in the Netherlands. This legal concept dictates the time frame within which you are entitled to pursue payment of an invoice. Once this period expires, you legally lose the right to claim the debt.

Here's what you need to know:

• For Consumer Invoices: The statute of limitations for consumer invoices is generally 2 years. However, this period extends to 5 years for services and travel-related invoices. It's crucial to track these timeframes closely to ensure you don't lose the right to collect the debt.
• For Business Invoices: When dealing with business clients, the limitation period is set at 5 years from the end of the payment term agreed upon in the invoice. This longer duration reflects the often more complex nature of B2B transactions.

Preventing Time-Bar of Claims:

A key strategy in debt collection is the concept of 'interruption'. By reminding your customer of the overdue invoice before the limitation period expires, you effectively reset the limitation clock. This action ensures that your right to collect the debt remains valid for another full limitation period. Here is what you should do:

• Written Reminder: Send a written reminder to the debtor before the end of the limitation period, clearly stating that the invoice is due and reaffirming your intent to collect.
• Legal Requirements: As per the Dutch Supreme Court's guidelines, such a communication should be a clear warning to the debtor, prompting them to retain relevant data and evidence for their defense.
• Consideration of Context: The wording, context, and circumstances of the notice, including past correspondence, are vital in determining its validity under Article 3:317 (1) of the Dutch Civil Code.

Sample Letter for Interrupting the Statute of Limitations:

Here's a template to use for interrupting the statute of limitations on a debt:

[Your Company Name]

[Your Company Address]

[Date]

[Debtor's Name]

[Debtor's Address]

Re: Outstanding Invoice [Invoice Number]

Dear [Debtor's Name],

We are writing to remind you that invoice number [Invoice Number] dated [Invoice Date], with the amount of [Invoice Amount], remains unpaid. This letter serves as a formal notice to inform you that the payment for this invoice is overdue.

We would also like to inform you that this notice is intended to prevent the aforementioned claim from being affected by the statute of limitations, as stated under article 3:317 (1) of the Dutch Civil Code. We continue to assert our right to payment and all related legal claims unequivocally, and we expressly reserve all rights in this regard.

Please be aware that failure to settle this debt may compel us to initiate legal proceedings to recover the full amount of our claims, along with any applicable interest and costs.

We hope to resolve this matter amicably and urge you to contact us to discuss payment options.

Sincerely,

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[Your Name]

[Your Position]

[Your Contact Information]

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In practical terms, keeping a close eye on the expiration dates of invoices and strategically sending reminders can preserve your legal right to collect, significantly impacting the success of your debt collection efforts in the Netherlands.

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1.3 Assembling Essential Documents for Effective Debt Collection

The foundation of successful debt collection is built upon thorough documentation. Gathering and organizing the necessary documents is a critical step in establishing the legitimacy of your claim and ensuring a smooth legal process, if it becomes necessary. Here are the key documents to collect:

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• Original Contract or Agreement: This is the cornerstone document that outlines the terms of the debt between the creditor and debtor. It should detail the amount owed, payment terms, and any other relevant conditions. This contract serves as the primary proof of the debtor's obligation.
• Invoices: Complete records of all invoices sent to the debtor are vital. These not only prove the existence of the debt but also help in calculating the total amount due, including any accrued interest or fees.
• Payment Reminders and Correspondence: Documentation of all communication attempts with the debtor is crucial. This includes copies of payment reminders, emails, letters, and any responses received. These documents demonstrate your efforts to resolve the matter amicably.

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Maintaining Communication Records: A Critical Aspect for Legal Proceedings

Effective record-keeping of communications with debtors is crucial, especially if the claim is disputed and requires legal intervention. The key elements to focus on include:

• Detailed Communication Log: It's vital to maintain a comprehensive log of all interactions with the debtor. This log should chronicle the dates, modes of communication (like phone calls or emails), and summaries of each interaction. Such detailed records are invaluable in legal settings, providing a clear history of your efforts to resolve the debt.
• Compliance with Legal Standards: All your documentation processes should adhere to Dutch laws, particularly regarding personal data protection. Handling sensitive information responsibly and legally is not just a compliance issue but also reflects your commitment to ethical practices.

A well-maintained and organized documentation system can significantly enhance the effectiveness of your debt collection endeavors. It not only bolsters your legal stance but also conveys your professional approach to the debtor.

Step 2: Call Your Customer for an Initiating Dialogue

In many instances, a phone call can serve as an effective first step. This approach allows for a more personal interaction and can provide insights into any issues or misunderstandings regarding the payment.

If your debtor is a Dutch company, it's crucial to speak with someone authorized to make decisions. You can find out who this is from the trade register of the Dutch Chamber of Commerce. This ensures that you are communicating with a person who has the authority to address and resolve the issue.

During the call, focus on:

• Service Satisfaction: Politely ask if the service or product provided met their expectations.
• Invoice Accuracy: Confirm whether the invoice was received and if all details on it are correct as per the debtor's records.
• Payment Commitment: Try to secure a commitment on when the payment will be made.

This conversation is not only about fact-finding but also about maintaining a positive relationship. Be respectful and professional, as this can influence the debtor's willingness to settle the debt.

Documenting the Conversation

Documenting your conversation is vital. Make detailed notes of the call, including the date, the person you spoke with, and the key points discussed. This documentation can be crucial if the case escalates to legal proceedings. Under Dutch law, recording telephone conversations without the other party's consent can be legally sensitive. While you may not always be permitted to record calls without prior consent, transcriptions or audio recordings could still be admissible in civil court proceedings as evidence.

By following these steps and engaging in a thoughtful dialogue, you can often gain valuable insights into the reasons behind the delayed payment and potentially resolve the issue without needing to escalate further. Remember, the tone and approach of this conversation can significantly influence the debtor's responsiveness and willingness to settle the outstanding debt.

Step 3: Send a payment reminder

After the initial steps of preparing your case and calling your customer, if the payment is still outstanding, the next formal step is to send a payment reminder. This is a crucial part of the amicable collection process and serves as a gentle nudge to your debtor, reminding them of their obligation.

Why Payment Reminders are Important

• Prompts Action: Often, late payments are due to forgetfulness or oversight. A payment reminder acts as a prompt for the debtor to take immediate action.
• Maintains Professional Relationship: It helps maintain a cordial professional relationship, as it's a non-confrontational approach to debt recovery.
• Documentation: It serves as a documented effort of your attempt to collect the debt amicably, which is important if the case escalates to legal proceedings.

Creating an Effective Payment Reminder

• Timing: Send the reminder a few days after the payment term has expired. This timing is crucial as it balances between giving the debtor a reasonable grace period and ensuring prompt follow-up.
• Content: The reminder should include:

• A reference to the original invoice (invoice number and date).
• A statement of the amount due.
• A polite request for payment.
• A notice that statutory interest will be charged if the payment continues to be delayed.

Tone: Keep the tone friendly and professional. This is a reminder, not a demand, and the aim is to preserve a good business relationship.

Delivery Method: Choose a method that ensures the reminder reaches the debtor promptly. Email is often effective, but depending on the situation, a physical letter or even a text message might be more appropriate.

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[Your Company Letterhead]

[Date]

[Debtor's Name]

[Debtor's Address]

Re: Reminder for Outstanding Payment - Invoice [Invoice Number]

Dear [Debtor's Name],

I hope this message finds you well. We are writing to remind you that payment for invoice [Invoice Number], dated [Invoice Date], has not been received. The payment was due on [Due Date], and as of today, it remains outstanding.

We understand that sometimes delays can occur and would like to offer our assistance in case there are any issues or concerns regarding this payment. We value our relationship and aim to resolve this matter amicably.

Please note that if the payment is not received by [New Due Date], we may have to add statutory interest to the outstanding amount, as per our terms and conditions and in accordance with Dutch law.

We appreciate your prompt attention to this matter and look forward to resolving it at the earliest. Should you have any questions or require further details, please do not hesitate to contact us.

Thank you for your cooperation and understanding.

Sincerely,

[Your Name]

[Your Position]

[Your Contact Information]

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Step 4: Send a Letter of Formal Notice (Demand Letter)

Following up on the amicable collection efforts, if the debtor still fails to make the payment, it's time to send a formal demand letter. This step escalates the seriousness of the matter, indicating your readiness to pursue further legal action if necessary.

The Importance of a Demand Letter in Dutch Debt Collection

• Legal Requirement for Private Individuals: Under Dutch law, private individuals must receive a formal notice before any late payment fees or interest rates can be added to the claim. This legal safeguard provides them with a mandatory 16-day period (one day for sending, one day for receiving, and 14 days for reviewing) to settle the outstanding debt without additional charges
• Different Protocols for Businesses: If the debtor is a business, the process can be more flexible, often guided by the terms set out in your general conditions.

Key Elements of a Dutch Demand Letter

• References: Include details of the transaction, overdue invoice, prior communications, and sent reminders.
• 16-Day Payment Term: Clearly set a 16-day deadline for payment, in compliance with Dutch legal standards.
• Consequences of Non-Payment: State your intention to charge collection costs and default interest, and mention potential legal action if payment is not received within the stipulated period.

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Delivery and Documentation

• Method of Sending: Utilize both registered mail (with confirmation of receipt) and regular mail for sending the demand letter. Email can also be used, but for legal certainty, registered post is preferable.
• Record Keeping: Retain copies of the demand letter and any delivery receipts. This documentation is crucial if the case escalates and you need to provide evidence of your efforts to recover the debt.

By carefully crafting and sending this demand letter, you move one step closer to resolving the debt issue, while still maintaining a professional and legally compliant approach. This letter serves as a critical document, underlining the seriousness of your intent to recover the debt through legal means if necessary.

Step 5: Charge Collection Costs and Statutory Interest

When faced with unpaid invoices, Dutch law permits creditors to add specific charges to the outstanding amount. This step is vital in the debt collection process, as it compensates for the efforts and resources involved in pursuing the debt. These late payment penalties are:

• Compensation Fee: A standard collection cost of €40 is applicable. This is a fixed fee allowed under Dutch law for your efforts in attempting to collect the debt.
• Collection Cost: Beyond the fixed fee, you can charge a reasonable compensation for additional expenses incurred. This includes legal fees, administrative costs, or any other collection-related expenses. This cost is supplementary to the €40 minimum fee.
• Interest: From the day the payment term expires, you are entitled to charge statutory interest on the outstanding amount.

How To Calculate Dutch Debt Collection Costs

Collection costs in the Netherlands are the expenses a creditor incurs while attempting to collect unpaid debts. These costs become applicable when a debtor fails to pay voluntarily. The nature of these costs and the amount that can be charged are regulated by Dutch law to ensure fairness and prevent exorbitant charges.

The Decree on the Collection of Costs Act (WIK: Act of 15 March 2012) plays a crucial role here. It amends Book 6 of the Dutch Civil Code and the Code of Civil Procedure, providing a clear structure for calculating collection costs.

Scale for Collection Costs

The WIK stipulates a scale to calculate these costs, capping the maximum amount at €6,775. The breakdown is as follows:

• For the first €2,500: 15% (minimum €40)
• For the next €2,500: 10%
• For the next €5,000: 5%
• For the next €190,000: 1%
• For amounts above €200,000: 0.5% (up to a maximum of €6,775)

Minimum Collection Costs

There is a legal minimum of €40 for collection costs. For instance, if your invoice is €300, the collection agency can charge 15% of €300, which is €45.

Interest Rates on Late Payments in the Netherlands

The statutory interest rate is a key component in debt collection, compensating creditors for the delay in payment. This rate is set annually by the Dutch government, particularly the Ministry of Justice and Security, as outlined in Section 6:119a of the Dutch Civil Code. The aim of this interest is to provide fair compensation for the use of capital in B2B and government-related transactions. It encourages timely payments and compensates for the financial impacts of delayed payments, such as lost income or additional financing costs.

Different Types of Statutory Interest

• For Non-Commercial Transactions: The statutory interest rate for consumer transactions (non-commercial) as of July 1, 2023, is set at 6%. This rate is often referred to as the “statutory interest for consumers” and applies to scenarios like compensation for delay or overdue payments from private individuals.
• For Commercial Transactions: Commercial transactions have a different rate, known as the statutory commercial interest. As of July 1, 2023, this rate is 12%. It applies to transactions between companies or between companies and government institutions.

Calculation of Statutory Commercial Interest

1. Determine the Calculation Period: From the due date to the date of actual payment.
2. Determine the Amount: The outstanding claim, including collection costs and other charges.
3. Apply the Interest Rate: 6% for non-commercial and 12% for commercial transactions.

Example Calculation: For an outstanding amount of €10,000 with a payment term expired, and at a 12% interest rate, the interest would be: (€10,000 x 12%) / 100 = €1,200. This €1,200 is in addition to the original €10,000 debt.

This comprehensive approach to charging collection costs and statutory interest is a critical aspect of debt recovery in the Netherlands. It ensures that creditors are fairly compensated for their efforts and losses due to delayed payments while keeping the process within legal and ethical boundaries.

Interest Rates on late payments in the Netherlands

The interest rate of the statutory interest is determined annually by the government . The Ministry of Justice and Security annually determines the percentage of the statutory interest. This is regulated in Section 6:119a of the Dutch Civil Code .

​​Statutory commercial interest non-commercial transactions

In the Netherlands there is a statutory interest rate for non-commercial transactions. From July 1, 2023, the statutory interest rate for non-trade transactions is set at 6%. This is the so-called “statutory interest for consumers”. This interest rate applies to, for example, compensation, damage due to delay, or if there is interest on overdue payments from private individuals.

Statutory interest for commercial transactions

A different interest rate applies to commercial transactions, namely the statutory commercial interest. From 1 July 2023, the percentage of the statutory commercial interest has been set at 12%. This percentage applies to commercial transactions between companies, or between companies and government institutions.

Please note: the statutory commercial interest is a different percentage than the statutory interest for consumers. It is important to know that these percentages can change annually and that there can also be differences per country or region.

What is the purpose of statutory commercial interest

The purpose of statutory commercial interest is to provide statutory compensation for the use of capital in business-to-business commercial transactions, or between businesses and government agencies.

It is intended to encourage parties to pay on time and to compensate for the financial consequences of a late payment, such as, for example, missing income, having to pay extra interest to third parties or taking out extra financing to cover liquidity needs. cover.

Statutory commercial interest provides companies with a legal instrument to enforce payment and ensures that the payment risk is shared more fairly between the trading parties. It can also help improve business cash flow and avoid bankruptcies due to late payments.

By setting a statutory interest rate, parties are encouraged to meet their payment obligations , creating more certainty and stability in trade relations between companies and between companies and governments.

How do you calculate the statutory commercial interest

The statutory commercial interest is an interest rate that is calculated on the outstanding amount of a commercial transaction where the payment term has expired. The statutory commercial interest is calculated as follows:

• Determine the period over which the interest is calculated: This is the period between the due date of the payment term and the date when the payment is finally received.
• Determine the amount on which the interest is calculated: This is the amount of the outstanding claim, including any collection costs and other costs.
• Determine the interest rate: For non-trade transactions, the interest rate for 2023 (2nd half year, from 1 July ) is 6%. For commercial transactions, the interest rate for 2023 (2nd half year, from 1 July ) is 12.00%.
• Calculate the statutory commercial interest: Multiply the amount on which the interest is calculated by the interest rate, and divide by 100. This is the amount of statutory commercial interest that must be paid over the period.

Example statutory interest: If the outstanding amount of a commercial transaction is €10,000 and the payment term has expired, the following interest must be calculated at an interest rate of 12.00% over the period in which the payment was overdue:

(€10,000 x 12.00%) / 100 = 1200

In this example, the statutory commercial interest is therefore €1200. This amount is in addition to the outstanding amount of € 10,000 that still has to be paid.

You can see the statutory interest rates here.

Step 6: Make a Payment Arrangement

Is this not possible for your customer to pay the full claim at once? Then agree on a payment arrangement. Put this arrangement in writing and agree that the arrangement will lapse if your customer does not pay at the agreed times.

Sample Of A Payment Arrangement Under Dutch Law - Template Settlement

A sample of such a payment arrangement could be this template:

On [...] we agreed on a payment schedule concerning invoice [...] in the amount of EUR [...]. I hereby confirm the payment arrangement agreed by us.

As from [...] you will repay the outstanding amount of EUR [...] in [...] instalments:

EUR [...], payable not later than [...]

EUR [...], payable not later than [...]

EUR [...], payable not later than on [...] and

finally the remaining amount of EUR [...], payable not later than on [...].

These instalments must be credited to our bank account with IBAN [...] in the name of [...], stating [...].

If one of the instalments is not paid, not paid in full or not paid on time, this payment arrangement shall immediately lapse, without any notice of default or other communication from our side being required. The amount outstanding at that time shall then become due and payable in full, plus interest and a charge for our legal fees.

We are sending you this letter in duplicate. To confirm and formalise our payment arrangement, please sign one copy of this letter, indicating with your signature the place and date of signature. Please return the signed letter to us. Our payment arrangement will not be effected if we have not received the letter signed for approval by you within one week of its date. In that case, we will be forced to take legal measures to collect the claim, with all the costs that this entails.

We assume, of course, that it will not have to come to that and we look forward to receiving your signed letter as well as your instalment payments under this payment schedule.

This letter is also expressly intended to prevent our claim from being affected by the statute of limitations and should be read as an interruption of the statute of limitations pursuant to Article 3:317, paragraph 1 of the Dutch Civil Code. We will continue to assert our legal claims against you unequivocally and we expressly reserve all rights. You should take into account that we will initiate legal proceedings against you if payment is not made.