7 legal tips to ensure customers pay faster

Do you want customers to pay faster? Establish payment terms in writing, send reminders immediately after they expire, and incorporate legal incentives into your general terms and conditions: retention of title, a penalty clause, and statutory commercial interest. A short payment term that you actively monitor, combined with strong terms and conditions, is by far the most effective means of preventing non-payment. In the Netherlands, a substantial proportion of business invoices are paid late, with direct consequences for your liquidity. Below, you will find seven concrete, legally sound ways to protect your working capital.

Why do customers pay late?

Late payments are rarely due to malicious intent. Often, it involves forgetfulness, an unclear invoice, a missing or excessively long payment term, or simply a customer placing your invoice at the bottom of the pile because there are no consequences attached. A significant proportion of Dutch business invoices are paid late, and this particularly affects SMEs: in the meantime, you are financing the work, while your own costs and taxes continue to accrue.

The common thread in the tips below: make your agreements explicit, actively monitor them, and ensure that paying late costs the customer money. This shifts the incentive from procrastination to timely payment.

1. Make clear agreements about the payment term

If you want customers to pay on time, always specify a final payment term. Do not only include this in your general terms and conditions, but also clearly state the payment term on the invoice, quotation, and order confirmation. A term of thirty days is considered standard, but fourteen or even eight days is becoming increasingly common.

Important to know: for agreements between entrepreneurs, statutory regulations apply to payment terms. If no specific terms are agreed upon, a term of thirty days generally applies. It is possible to agree on a longer term, but in principle up to a statutory maximum of sixty days. An even longer term is only permitted if it can be demonstrably shown not to be detrimental or manifestly unfair to the creditor. Therefore, it is better to keep your payment terms short rather than long.

Furthermore, note an additional rule that applies when a large company has to pay an SME or self-employed professional: in that situation, a payment term of longer than thirty days is not permitted. If you do agree on a longer period, the term is automatically reduced, and you can claim statutory commercial interest on the overdue payment. Are you unsure whether your terms and conditions are legally sound in this regard? Our corporate would be happy to review them with you.

What payment term can you agree on? An overview

• No term agreed (B2B): in principle, a statutory period of thirty days applies.
• Standard B2B: you are free to agree on a term of up to sixty days.
• Longer than sixty days (B2B): only permitted if this is demonstrably not detrimental or unfair to the creditor.
• Large company pays SME or self-employed professional: maximum of thirty days; a longer agreement is automatically shortened.

2. Adjust the payment term to the customer

Although your general terms and conditions contain a standard payment term, you may deviate from this in individual agreements. This makes the payment term a tool for your accounts receivable management.

Ask customers with a poor payment history or limited creditworthiness to pay sooner, for example in advance or in installments. This allows you to intervene earlier and prevents you from waiting a long time for a customer who ultimately fails to pay. Assess the creditworthiness of new, larger customers in advance; this is cheaper than collecting payments retrospectively. A practical example: if you are delivering a large order to a new customer for the first time, agree on a down payment or payment in installments so that you never pre-finance the full amount at once.

3. Send a payment reminder immediately

Imposing a payment deadline is not enough; you must also actively monitor it. As soon as the deadline expires, immediately send a friendly reminder. Often, it is simply a matter of forgetfulness, and that settles the matter. At the same time, you signal that your administration is in order.

Always include a copy of the invoice with the reminder so that the customer does not have to search for it, because procrastination leads to cancellation. If payment is not received, send a formal demand letter with a final payment term. Please note: for consumers, a proper formal demand letter with a payment term of fourteen days is legally required to charge collection costs. Read more about a structured approach on our page about debt collection.

4. Protect yourself against non-payment with your terms and conditions

Your general terms and conditions are your most powerful tool against non-payment. A few commonly used clauses:

• Retention of title: ownership of delivered goods passes only once the customer has paid in full. If the customer fails to pay, you can, in principle, reclaim the delivered goods.
• Suspension of new deliveries: you will only resume deliveries once all outstanding invoices have been paid.
• Grounds for termination due to payment difficulties: in the event of an impending creditworthiness problem or (deferral of) payment, you may terminate or suspend the agreement.

With these types of clauses, you take active action in the event of non-payment and limit your losses. However, a condition is that the terms and conditions have been correctly declared applicable and provided in a timely manner; otherwise, the customer may invalidate them. Therefore, ensure that your customer can demonstrably prove they received your general terms and conditions before or at the time of concluding the agreement.

5. Include a penalty clause in your agreement

You can include a penalty clause in your agreements and terms and conditions: a predetermined fee due as soon as the payment term has expired. This can be a fixed amount or a percentage of the outstanding invoice amount.

Pay attention to two things. First: a penalty clause generally takes the place of statutory (commercial) interest. Therefore, include in your terms and conditions that you retain the right to claim statutory (commercial) interest instead, so that you choose the most favorable regime on a case-by-case basis. Second: a penalty must not be excessive. A judge may reduce an unreasonably high penalty clause, and stricter rules apply to consumers. Therefore, keep the penalty realistic and proportionate to the damages.

6. Make use of the statutory commercial interest rate

If a business customer pays late, you are generally entitled to the statutory commercial interest: an increased interest rate that applies specifically to commercial transactions between entrepreneurs. This rate is significantly higher than the standard statutory interest and is set by the government every six months. Consequently, the percentage changes regularly, so always check the current rate (for example, via the central government) before calculating it.

In addition, in principle, you may also charge a fee for extrajudicial collection costs in the event of business non-payment. For claims against consumers, the amount of these collection costs is legally standardized via a sliding scale with a statutory minimum. Between business owners, you may deviate from this contractually, provided you clearly stipulate this in your terms and conditions. Specifically state in your terms and conditions that interest and collection costs are due in the event of late payment; this puts extra pressure on the customer to pay on time.

7. Reward quick payers

You don't have to just brandish fines and interest. Sometimes a reward works better. For example, set a payment term of thirty days, but offer a small discount to customers who pay within eight days.

A discount of one or two percent is very common. This entices customers to pay the invoice immediately instead of placing it at the bottom of the stack. Do calculate whether the discount outweighs the liquidity benefit; for most entrepreneurs, having money in the account sooner is well worth those few percent.

Step-by-step plan: from invoice to payment

If you want to organize your accounts receivable management efficiently, a fixed working method helps. Follow these steps for every assignment:

1. Declare your general terms and conditions applicable in advance and provide them to be demonstrably available.
2. Clearly state a short payment term on the quotation, order confirmation, and invoice.
3. Invoice immediately after delivery and send a neat, complete invoice.
4. Send a reminder immediately after the deadline has expired, with a copy of the invoice.
5. Is payment overdue? Send a reminder with a final deadline (for consumers: fourteen days).
6. Still haven't received anything? Start a debt collection process and claim interest and costs.

Good conditions are crucial

A friendly phone call sometimes works wonders, but your terms and conditions are often the most powerful tool to get customers to pay on time. A monitored payment term, a retention of title clause, a penalty clause, and strict accounts receivable management are your best tools, both proactively and curatively.

That is why, at MKB Juristen, we pay close attention to your legal position, not only when drafting general terms and conditions, but in all agreements we create for you. If a client remains in default despite everything, we assist you with the process from formal notice to debt collection. Should you encounter a broader legal issue, our legal assistance for entrepreneurs is at your service.

Frequently asked questions about letting customers pay faster

What is a reasonable payment term for an invoice?

Thirty days is considered standard, but fourteen or eight days is also permitted and yields payment faster. In principle, a statutory maximum of sixty days applies between entrepreneurs; a longer term can only be agreed upon under strict conditions. If a large company has to pay an SME or self-employed professional, a maximum of thirty days applies. It is better to keep your term short and monitor it actively.

Am I allowed to charge collection costs and interest for late payment?

Yes. For business clients, you can generally claim statutory commercial interest and compensation for collection costs. For consumers, the amount of collection costs is legally standardized, and a proper formal notice with a payment term of fourteen days is required before you charge any costs.

What is the difference between a penalty clause and the statutory commercial interest rate?

A penalty clause is a pre-agreed amount or percentage that the customer owes in the event of late payment. The statutory commercial interest rate is a statutory interest rate for commercial transactions. In principle, a penalty clause replaces that interest; therefore, include in your terms and conditions that you may choose which regime to apply.

What is a retention of title and why does it help?

With a retention of title clause, delivered goods remain legally yours until the customer has paid in full. If the customer fails to pay, you can, in principle, reclaim the goods. It provides a strong incentive to pay on time and limits your losses in the event of non-payment.

What is the statutory commercial interest rate?

The statutory commercial interest rate is set by the government every six months and is structurally higher than the standard statutory interest rate. Because the percentage can change every six months, always check the current rate via a reliable source, such as the central government, before calculating the interest.

What can I do if a customer doesn't pay even after reminders?

First, send a formal demand letter with a final payment deadline. If that does not help, you can initiate the collection process and claim the outstanding debt, potentially including interest and costs. Our legal experts will guide you through this process using our debt collectionapproach.

Want to get customers to pay faster? We'll help you get started

Do you want to shorten your payment terms and strengthen your legal position? Have your existing general terms and conditions and agreements reviewed, or have us draft them immediately with strong payment and collection clauses. If you already have an outstanding claim, take a look at our collectionsolutions or our broader legal assistance for entrepreneurs.

Schedule an intake and discuss with one of our legal experts how to get clients to pay faster on a structural basis.