How to protect yourself against late payments in and outside of the EU

Unpaid international invoices are a nightmare for all exporters. However, there is no need to despair. There are solutions available to recover your money, both when your money is inside and outside of the EU.

Late payment within the EU

The three main export destinations which are Germany, France and the Netherlands together account for nearly half of Belgium’s total trade revenue. The top ten include the United Kingdom, Italy, Spain, Poland and Luxembourg. Most entrepreneurs export to other EU countries. The good news is that, in most European countries, you benefit from extensive protection against bad payers. Here are the three main protection instruments:

The European small claims procedure

This procedure covers disputes up to a maximum of €5,000 (fees not included). This is a quick and fully digital procedure used for late-paying customers in another EU country (except Denmark). To use the instrument, you just need to complete the standard forms online. To find out how to proceed, visit the website Your Europe.

Benefits:

• You don't need legal assistance.
• You don't have a complex procedure to follow.
• You get a quick response.

The European directive on payment services

This directive is essentially intended to protect small companies from late payments by imposing a maximum payment term of 60 days for sales contracts with European companies, except if the parties expressly agree to different terms. You are entitled to interest and late payment penalties if your customer does not meet this deadline. Good to know: if the contract does not mention payment terms, the customer only has 30 days to make payment.

The European order for payment procedure

The European order for payment procedure is a procedure you can engage to recover any amount of money from a customer who has not paid. The procedure is applicable in all EU countries (except Denmark).

How does it work?

You fill in a request form online and pay the document fee. The competent court will then examine your request, which will result in three potential options: either the judge will request additional information, or they will reject your request, or they will issue an injunction for payment within 30 days. In the latter case, you will receive a copy of the injunction to pay sent to the customer. They will have 30 days to accept or oppose the injunction. A civil suit will follow, if required. Otherwise, the payment injunction will be declared legally binding.

What does the procedure cost?

Initiating a procedure in Belgium costs:

• €50 before the judge of the peace (for disputes up to €5,000);
• €165 to the court of first instance or the commercial court (for disputes in excess of €5,000).

The enrolment costs are payable by the losing party at the end of the procedure.

Note that there may also be fees related to the execution of the procedure and translation fees which you will probably have to advance. You won? In this case, the bailiff will recover the costs from the adverse party for you. Otherwise, you will have to pay your costs and those of the adverse party. 

Late payment outside of the EU

Getting late-paying customers outside the EU to pay their debt is much more difficult. If payment reminders and personal contact do not make them change their mind, there is generally only one solution: to hire an international debt collection company. They know the local usages, laws and languages and offer the best chance of success.

Our advice: if possible, work with a debt collection company which operates on the principle of “no cure, no pay”. If the debt recovery isn’t successful, you won’t have to pay anything.