Claims in Germany : Complete Guide

Payment behaviour in the country

Understanding payment behavior in Germany is essential to anticipate collection difficulties.

Payment terms in Germany

The Germans remain among the best payers, with an international collection complexity score of 42 according to the“Allianz Research” study.
By law, payment terms are 30 days, as in France.
According to Altares, payment delays averaged 4.1 days in the first half of 2023, well below the European average.
Some 62.4% of German companies pay their suppliers on time.

Payment-related cultural practices in Germany

Germans are known for their rigor and respect for contracts.
However, in the event of financial difficulties, they may delay payments.
Clear, direct communication is recommended.
Professional pre-litigation negotiation remains the most effective way to recover debts.
In Germany, the aim of insolvency proceedings has long been to recover the debtor’s assets to repay the creditor’s debt.
As a result, liquidation has remained the default procedure in practice, and the system provides no real support to unsecured creditors when it comes to recovering debts from insolvent debtors.

Amicable debt collection in Germany

Amicable debt collection is the first stage in the debt recovery process.
It involves trying to resolve the dispute amicably without resorting to the courts.
Here are the key stages:

• Initial contact with the debtor: We recommend sending a friendly dunning letter, politely reminding the debtor of the amount owed and the due date.
  This letter should include clear information about the debt and invite the debtor to rectify the situation quickly.
• Demand letter: If the debtor fails to respond to the reminder letter, a formal demand letter should be sent.
  This letter should be more formal, mention the potential consequences of non-payment, and set a reasonable ultimatum (usually 14 days) for settlement of the debt.
• Specialist agency intervention: If personal attempts fail, it may be a good idea to call in a debt collection agency.
  These agencies have the expertise and tools needed to induce the debtor to pay, often through negotiations or the threat of legal proceedings.

Legal recourse for debt collection in Germany

If amicable collection fails, legal recourse becomes necessary.
Here are the main steps in the process:

• Conciliation procedure: In Germany, a conciliation stage may be compulsory before going to court.
  This enables an agreement to be reached without having to go through a lengthy and costly trial.
• Injonction de payer (Mahnbescheid): This is a simplified procedure whereby the creditor applies to the court for an injunction to pay.
  If the debtor does not contest the order within two weeks, the order becomes a writ of execution.
• Civil trial: If the debtor contests the injunction, or if the claim is complex, a civil trial may be necessary.
  The court examines the evidence and renders a decision.
  If the judgment is in favor of the creditor, it becomes an enforceable title.

Systems specific to Germany

In January 2021, Germany will enact a protective law in response to Covid: the “Stabilization and Restructuring Framework of Companies Act (STARUG)”.
This new German law creates a pre-insolvency restructuring procedure.
It provides for court intervention and the possibility of orders binding the creditors concerned.  

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