ERPNext Foundation ERPNext Cloud User Manual Blog Discuss Frappé* Donate

Dunning / Mahnung / Warning Notice

accounting
salesinvoice

#1

Taking on this topic again:

How late payments are handled in Germany

Usually, the due date is 14 days after the invoice date. When the invoice is overdue, send a friendly reminder. Then, the fun, a dunning process, starts:

  1. Send the first warning notice (“1. Mahnung”)

    • Add a warning fee to the invoice
    • Set a new deadline, say 8 days

    In order for the debtor to be officially in delay of performance, the creditor generally must provide the debtor with a warning notice. […] Irrespective of a warning notice, the debtor is in delay of performance at the latest after 30 days following the payment due date and presentation of the invoice.

    • From now on we charge interest on the invoice total

    If the debtor is in delay of paying a money debt, then the creditor may claim the interest on arrears as so-called loss caused by delayed performance.

  2. Second deadline arrives, send next warning notice.

    • Add a warning fee to the invoice
    • Add interest since last warning to the invoice
    • Set a new deadline, say 5 days
  3. Third deadline arrives, send a final warning notice.

    • Add a warning fee to the invoice
    • Add interest since last warning to the invoice
    • Set a new deadline, say 3 days
  4. (Fourth deadline arrives, hand the case over to a lawyer.)

Each stage should result in a new PDF document that looks like the original invoice (same number, items, etc.) but with a different title (“Warning Notice 1”, “Warning Notice 2”, …), new due date, fees and interest.

So, first, the customer owes € 100.00, then € 103.00, then € 106.00, etc. The amount continues to grow until payment is made. However, the invoice (at least the number) needs to stay the same during this process.

If we get paid – finally! –, we book the following:

Account Debit Credit
1800 - Bank 106.00
1200 - Trade receivables 100.00
7100 - Other interest and similar income 006.00

(Taxes ignored, for simplicity)