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Pre-collection: the customer-friendly alternative to legal proceedings
For many entrepreneurs, the step from an unpaid invoice to a collection procedure is more daunting than necessary. Formal collection often marks the end of a commercial relationship and results in legal costs that remain partly at the debtor's own expense. In between lies a phase commonly referred to in practice as pre-collection, in which a targeted legal approach persuades the debtor to pay without the parties facing each other in court. If executed correctly, this intermediate step prevents a temporary payment arrears from escalating into a dispute.
The legal basis of pre-collection
Pre-collection relies on a number of statutory and contractual building blocks. The statutory commercial interest under Article 6:119a of the Dutch Civil Code generally commences from the agreed payment term, and failing that, from thirty days after receipt of the invoice or the performance. For consumers, the ordinary statutory interest under Article 6:119 of the Dutch Civil Code applies.
Extrajudicial collection costs for consumers are capped pursuant to the Collection Costs Act and the Decree on Compensation for Extrajudicial Collection Costs, with a lower limit of forty euros and a sliding scale that increases with the principal amount. For B2B claims, this capping does not apply if a different amount has been agreed upon in the general terms and conditions or the agreement. However, that amount must be reasonable; otherwise, the court may reduce it pursuant to Article 6:248 paragraph 2 of the Dutch Civil Code.
For consumers, the fourteen-day notice is mandatory before collection costs can be claimed. The letter must be free of charge, state a clear payment term of fourteen days after receipt, and announce the amount of any collection costs and VAT due.
What an effective pre-collection letter entails
An effective pre-collection letter from a lawyer is not the same as a repeated formal notice to your accounts receivable department. The letter states the factual and legal basis of the claim, demands payment within a reasonable period, explicitly announces legal action, including provisional attachment if appropriate, and points out the accrual of interest and costs. Furthermore, the letter interrupts the statute of limitations pursuant to Article 3:317 of the Dutch Civil Code, which is important for older claims.
In practice, this approach results in payment within two weeks in a significant proportion of cases, without the need to initiate legal proceedings. The combination of a lawyer's letterhead, a concrete announcement of follow-up measures, and a reasonable timeframe is more effective on debtors than yet another demand letter from the company itself.
When pre-collection is not the right route
Pre-collection works best for undisputed claims where the debtor fails to pay due to liquidity problems or administrative negligence. In the case of a disputed claim, or when there are signs of the debtor's impending bankruptcy, delay is generally detrimental. If you wait too long to initiate a provisional attachment, a trustee can later successfully invoke the fraudulent conveyance (faillissementspauliana) and recover the seized assets. In the event of signs of inability to pay, prompt action is required, possibly immediately via a summons in summary proceedings or via a provisional attachment.
Moreover, for claims against consumers or small and medium-sized enterprises with limited recovery options, the cost advantage of pre-collection outweighs the cost advantage of pre-collection. For large, disputed claims against solvent parties, direct recourse to the main proceedings is sometimes more efficient.
Follow-up action
Do you have outstanding invoices that are ineffective after regular reminders, but wish to maintain the client relationship where possible? Our lawyers assess the claim, the legal position, and the most efficient approach. In many cases, a pre-collection letter from a lawyer is sufficient to secure payment within two weeks. Contact us for a brief analysis.
