Moving process
A reminder for a missing payment may be necessary if a debtor fails to make a payment.
The reminder can be designed in many different ways, sent out in different ways, at varying intervals and either with or without reminder fees.
In this section, we focus on the dunning process and give advice on how you as a company can build your own dunning process.
Requirements and rules for your dunning process
Basically, there aren't many requirements and regulations in Denmark regarding the dunning process, and you can pretty much shape and send out your reminders as you wish.
Before you as a creditor can send a reminder for non-payment, the payment deadline must have passed. In other words, you are not allowed to start reminders before the payment deadline has expired.
Once the payment deadline has passed, the company can build its dunning process as it wishes.
You should be aware that if you impose reminder fees on your reminders, the debtor MUST have a minimum of 10 days to pay.
The maximum reminder fee is DKK 100 and a maximum of three reminders with a reminder fee can be sent.
If no reminder fees are imposed, the creditor is largely free to determine their reminder process.
Efficient reminder process
Historically, there have been many discussions about what the most efficient reminder process is, and the debate is not over yet.
As a debt collection company, we believe that the most effective reminder process is short and to the point. It should be shortened if it is deemed that the reminder process is not leading to any result.
There is the option to send friendly reminders, typically a heads-up to the customer about a missed payment. But there's also the option to send collection notices with a reminder fee.
For many, effective reminder processes can also be differentiated. This means that some customers get one type of reminder process, while other customers or customer types get a different type.
We always recommend that the creditor has a defined reminder process so that the accounting department always knows which steps are next, regardless of whether you have a long, short or differentiated reminder process.
The typical reminder process
Although there are many different dunning processes, our experience as a debt collection company is that many still follow a very classic model. A typical reminder process can look something like this:
- Day 0: Payment deadline is missed.
- Day 7: Friendly reminder is sent without a reminder fee.
- Day 18: First reminder letter is sent with a reminder fee applied.
- Day 29: Second reminder is sent with a reminder fee applied.
- Day 40: Third reminder is sent with a reminder fee applied.
- Day 51: Collection notice is sent.
- Day 62: The case is handed over to debt collection.
The above outlines a traditional reminder process, but it also illustrates a weakness of following a lengthy reminder process. If a creditor chooses to send a friendly reminder, all three reminder letters with a reminder fee and at the same time complies with the collection notice deadline, it can easily take almost 2 months from the payment deadline before the case can legally be handed over for collection.
Therefore, it may be worth considering whether it is necessary to send all three reminders before the debt collection notice or whether one would be sufficient. It is important to assess whether the third reminder actually motivates the debtor to pay.
