Always send a debt collection notice

The work has been done, the invoice has been sent - but the payment has not been made and now a debt collection notice has to be sent; what do you do?

Many Danish companies, small and large, from time to time experience challenges with bad problems, and here at Collectia we help many of them - both with debt collection, sending reminders, debt collection notice and enforcement court.

Fortunately, as a self-employed person, there are many things you can do when you are not paid - and sending adebt collection notice is one of them.

In this article, we tell you everything you need to know about a debt collection notice: what it is, why it is a requirement to send - and what the law says about it. We also give you the opportunity to download a free debt collection notice example/template that you can use freely.

Debt collection notice - what is it?

In its simplest terms, a debt collection notice is a notice of collection - and thus a notice to your debtor that further action may be taken in the form of debt collection if payment continues to be missed.

A debt collection notice is also commonly referred to as a debt collection letter, paragraph 10 letter, debt collection letter and demand letter. Letter of demand is the legal use of the word and is thus the legally correct term - but most companies, lawyers and debt collection companies use the other terms just as much, and there is no right or wrong use of the word - as it covers one and the same thing.

The debt collection notice is described in section 10 of the Danish Debt Collection Act - "Enquiries to the debtor" - which states "Before any other measures may be taken against the debtor for the purpose of collecting a claim, a demand letter must be sent to the debtor".

In other words, a debt collection notice must be sent before debt collection can be initiated - for example, by imposing additional fees, calls, and similar actions.

The debt collection law does not define who should send the debt collection notice (demand letter), and it is therefore perfectly okay that you yourself, your lawyer or your debt collection company does it - just that it is done before the actual debt collection. At Collectia, for example, we always send the debt collection notice on behalf of our customers if they have not done it themselves.

When should and when can I send a debt collection notice?

There is no legislation on when you can and must send a debt collection notice - it's basically up to you and your company's policy - just that it is sent after the due date.

In principle, you can send a debt collection notice immediately after the due date and you have established that payment has not been made.

In practice, most companies send out the first reminders and collection notices somewhere between 7 and 10 days after the due date - but it's 100% up to your policy in this area.

Reminder letters and debt collection notices?

Unfortunately, what many people do not know is that reminder letters and debt collection notices are in principle independent of each other, and that reminder letters (with or without a reminder fee) are voluntary for the company to send - unlike debt collection notices, which are mandatory if you want to start a debt collection process.

In other words, you do not have to send 1, 2 or 3 reminders before sending a debt collection notice, you can in principle simply send the debt collection notice, without prior reminders. It is 100% up to your policy.

Historically, many companies have often sent 1, 2 and 3 reminder letters (typically with a 100 DKK reminder fee on each) and then sent the debt collection notice. This can be an advantage if you want to impose reminder fees on your debtor, but also a disadvantage as the collection process is postponed each time by at least 10 days - and thus your liquidity.

You may impose a reminder fee on a debt collection notice.

What should a debt collection notice contain?

There is no legal template or form for a debt collection notice and you can, in principle, design it in any way you want. However, the Debt Collection Act has three essential elements that you must include in your debt collection notice for it to be valid:

A clear indication of the requirement
A deadline of at least 10 days to pay
A clear communication to your customer that in case of continued non-payment, the case will be sent to debt collection, which will incur additional costs

The clear indication of requirements

The first claim is defined in Article 10(2) of the Debt Collection Act: "The demand letter must clearly state all information necessary for the debtor to assess the claim."

In practice, the above will mean that you as a creditor will have to specify the claim in question, which is often enough with one or more invoice numbers. We recommend that you always include at least the following in your debt collection notice:

Your company name,
Your CVR no.
Account no. and reg no.
Name of the debtor (customer)
Address of the debtor (customer)
The unpaid invoice number(s)
The full amount
The original payment deadline

Some companies also choose to attach the original invoice to their debt collection notice, so that the debtor is again made aware of what the claim specifically includes.

At least 10 days

In addition to the clear indication of the claim, Article 10(3) of the Debt Collection Act also defines that "the letter of demand shall specify a time limit within which the debtor may settle the claim without taking measures that would cause the debtor to incur additional costs. The time limit shall be at least 10 days from the date of dispatch of the letter of demand."

In other words, you must give your debtor at least 10 days to pay your debt collection notice and if this does not happen, further action may be taken. If you do not give the debtor at least 10 days to pay, then your debt collection notice is not valid - and in principle you cannot take any further action. The law defines 10 days as "at least" - so you can give more than 10 days, but not less.

We recommend that you use our debt collection notice template - it complies with all common requirements and formalities.

Debt collection notice template

Send your debt collection notice

There are no legal requirements on how the debt collection notice is sent - or on what medium. You can therefore send the notice by email, letter or similar.

We recommend that you send the debt collection notice in the same way as the other communication about the sale, as this will ensure that you get through to the debtor.

After the recovery notice

The purpose of the debt collection notice is to warn of further action if the debt collection notice is not paid within 10 days of sending it to the debtor.

Fortunately, most debt collection alerts get most debtors out of trouble and get their outstanding debt paid. The case is closed and you don't need to take any further action.

If the debtor does not pay within the specified period of at least 10 days, you then have the opportunity to send the case to debt collection, with a lawyer - or here at Collectia. Read more about our service here.

Frequently asked questions on sending a debt collection notice

There are no legal requirements on how the debt collection notice is sent - or on what medium. You can therefore send the notice by email, letter or similar.

We recommend that you send the debt collection notice in the same way as the other communication about the sale, as this will ensure that you get through to the debtor.

"What format should I send my incass alert i?"

There is no legal requirement on the format of your debt collection notice, so you can send it either electronically or by post.

Here at Collectia we recommend that you send it in the same way as you have had the other communication with the customer.

"Can I send a debt collection notice several times?"

Yes, there is no legal requirement on how many times you send your debt collection notice - as long as they are not sent before the payment deadline of at least 10 days.

Here at Collectia, we do not recommend sending a debt collection notice more than once.