This article is for general informational purposes only and does not constitute legal advice. For legal questions about your specific situation, please consult a qualified lawyer or tax advisor.
Why Unpaid Invoices Hit Freelancers Hard
As a freelancer or small business owner, unpaid invoices are more than an annoyance. You've done the work, but the money isn't there. Unlike larger companies, you don't have a cash buffer to absorb the hit. Every overdue invoice directly affects your liquidity.
The good news: a clear dunning process recovers most outstanding payments. And the sooner you act, the higher your success rate.
When Is an Invoice Overdue?
Before you send a reminder, you need to know when your client is actually in default:
- Payment term on the invoice: If it says "payable within 14 days," that's your due date.
- No payment term specified: Under §286(3) BGB (German Civil Code), your client defaults 30 days after receiving the invoice. For consumers, this only applies if you explicitly noted it on the invoice.
- Due immediately: Without any other agreement, invoices are technically due immediately (§271 BGB). But default only kicks in after a reminder or after 30 days.
What Can You Charge on Top Once Payment Is Late?
Once your client is in default, they owe you more than the invoice amount. This is set out in §288 BGB and applies automatically, so you do not have to agree it in advance:
- Default interest from consumers: 5 percentage points above the Basiszinssatz (base rate).
- Default interest from businesses: 9 percentage points above the base rate, where no consumer is involved.
- A flat 40 EUR late fee: from businesses only. It is credited against any later cost of legal enforcement.
The Deutsche Bundesbank sets the base rate twice a year, on 1 January and 1 July. Since 1 July 2026 it has been 1.52 percent, which currently gives:
| Client | Interest rate | Calculation |
|---|---|---|
| Consumer | 6.52 percent | 1.52 + 5 percentage points |
| Business | 10.52 percent | 1.52 + 9 percentage points |
Example: A 3,000 EUR invoice to a business client is 30 days overdue. Default interest comes to 3,000 x 10.52 percent x 30/365, or roughly 25.94 EUR, plus the 40 EUR flat fee.
The default interest calculator works this out to the day for your own case. It splits the period automatically when your delay runs across a Basiszinssatz reset date, meaning 1 January or 1 July.
Two points that often get missed: the right to default interest cannot validly be excluded by contract (§288(6) BGB), and the 40 EUR flat fee also applies to instalments and partial payments. Whether you actually claim these amounts is a business decision. With long-standing clients many freelancers waive them, but still mention the entitlement in the reminder to add weight.
As of August 2026. Check the current base rate with the Deutsche Bundesbank before calculating interest.
The Dunning Process: Step by Step
There's no legal requirement to send multiple reminders. Legally, a single reminder is enough to trigger default. In practice, a three-step process works best:
1. Payment reminder (friendly)
Send it 1 to 5 days after the due date. Often the invoice simply got overlooked.
- Tone: friendly and factual
- Reference the invoice number, date, and amount
- Set a new deadline (e.g., 7 days)
- No mention of fees or consequences
2. First dunning letter (firm)
If nothing comes in after the reminder, follow up 7 to 14 days later with the first formal dunning letter.
- Tone: firm but professional
- Again reference the invoice number, date, and amount
- Set a new deadline (e.g., 10 days)
- Note that further steps may follow if payment isn't received
3. Final dunning letter (with consequences)
If there's still no payment, send the final letter 7 to 14 days later.
- Tone: clear and unambiguous
- Set a final deadline (e.g., 7 days)
- Announce that you will involve a debt collection agency or lawyer if payment isn't received
- Optional: mention court proceedings
What Belongs in a Dunning Letter?
For your dunning letter to be formally correct and effective, it should include:
- Your name and address (as creditor)
- Client's name and address (as debtor)
- Reference to the original invoice: invoice number, date, service period
- Outstanding amount
- Original due date
- New payment deadline with a specific date
- Bank details (so your client doesn't have to look them up)
- Dunning stage (reminder, first letter, final letter)
- Consequences of non-payment (from the second letter onward)
Template: First Dunning Letter
Here's a template you can adapt:
Payment Reminder / Dunning Letter
Dear [Name],
we have not yet received payment for the following invoice:
- Invoice number: [XXXX]
- Invoice date: [DD.MM.YYYY]
- Amount: [X,XXX.XX EUR]
- Due since: [DD.MM.YYYY]
Please transfer the outstanding amount to the account listed below by [new date].
If your payment has crossed with this letter, please disregard it.
Best regards, [Your name]
Adjust the tone to match the stage. Friendlier for the initial reminder, more direct for the final letter with a clear outline of next steps.
7 Tips to Prevent Late Payments
The best dunning letter is one you never have to send:
- Clear payment terms on every invoice. Write the actual due date on the invoice, not just "payable immediately."
- Send invoices right away. The faster the invoice goes out, the faster you get paid. Don't wait until the end of the month.
- Partial payments for large projects. Agree on milestone payments or an upfront deposit. That way you're not carrying all the risk.
- Check creditworthiness for new clients. For larger contracts, a quick check before you start is worth it.
- Payment terms in your quotes. Clarify payment conditions in the quote, not just on the invoice.
- Automatic payment reminders. Let your invoicing tool alert you when an invoice is overdue. The guide to automated invoicing shows how to automate this and other steps.
- Look professional. Clean, complete invoices get paid faster than hand-made PDFs.
When to Involve a Collection Agency or Lawyer
If even the final dunning letter gets no response, you have three options:
- Hire a collection agency: Makes sense for claims above roughly 100 EUR. The agency handles the entire process. If successful, the debtor bears the costs.
- Engage a lawyer: Often more effective than collection agencies, because a lawyer's letter carries more weight. Worth it for larger amounts.
- Court dunning procedure: You can apply for a Mahnbescheid (court payment order) online at mahngerichte.de. No lawyer needed, and fees start at around 36 EUR depending on the claim amount.
Managing Reminders Efficiently With a Tool
Manually tracking overdue invoices and dunning deadlines is tedious and error-prone. An invoicing tool helps you:
- See open invoices and due dates at a glance
- Match incoming payments to invoices
- Standardize payment terms and deadlines
- Create professional, complete, and compliant invoices
Related Reading
- The complete guide to writing invoices: Set up mandatory fields and payment terms properly.
- Free templates: Put payment terms in writing before the project starts, with sample text to copy.
- Cancellation invoices in Germany: What to do when an invoice needs correction.
- Automated invoicing in the cloud: Send payment reminders and recurring invoices automatically.
- Free templates: Payment reminder, invoice, quote, and cancellation invoice to download.
Want to stay on top of your invoices and payment deadlines? Try revoBill, the simple invoicing tool for freelancers and small businesses.