Germany collection profile



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Complexity of collecting debt:

notable High Very High Severe

Executive summary

  • The payment behavior of domestic firms is good and the courts are efficient in delivering timely decisions however, professional pre-legal negotiation efforts remain the most efficient means of collecting debt.
  • The purpose of insolvency proceedings in Germany has long been to realize the debtor's assets to repay the creditor's debt. As a result, liquidation has in practice remained the default procedure and the system provides no genuine support to unsecured creditors when it comes to collecting debt from insolvent creditors.
General Information GENERAL INFORMATION arrow-transparent
Collection Practices COLLECTION PRACTICES arrow-transparent
Court Proceedings Court PROCEEDINGS arrow-transparent
Insolvency Proceedings INSOLVENCY PROCEEDINGS arrow-transparent
General Information 


Days Sales Outstanding (DSO)

Payments in Germany take 45 days on average including delays. The payment behavior of German companies is good and, generally, short delays may be explained by a tendency to rely on supplier credit rather than on bank credit. As a general rule, however, German partners seek to preserve their credit history and thus avoid late payments.


Late payment interest

The core principle under German law is that the debtor, however late with payments, has to compensate and/or reimburse the damages caused by the late payment to the creditor. The Recast Directive 2011/7/EU which stipulates that payments in the EU must be made within 60 days was thus transposed into domestic law. The domestic rules are however stricter than the EU requirements: as a general rule, business-to-business transactions must be paid within 30 calendar days and late payment interest may be claimed as soon as this timeframe has elapsed. Interest rates may be agreed contractually or calculated from the base rate set by the Europäische Zentralbank, plus 8 percentage points. In practice, interest remains a matter of negotiation between debtors and creditors.

Furthermore, the Civil Code (Bürgerliches Gesetzbuch, paragraphs 280 to 286) allows charging a compensation fee (Verzugsschadensersatz) covering for the damage caused to the creditor, and covering for collection costs. There is a long-lasting legal tradition in this regard in Germany, and the law is in fact more favorable than the recently introduced EU allowances in case of late payments. In practice, however, whether or not collections costs are paid is a matter of negotiation and relying on collection specialists would remain a significant tool to ensure that debt is recovered.

collection practice 


Orchestrated negotiation first

Although German courts are reliable and fairly efficient, it is advisable to first consider amicable settlement opportunities as an alternative to formal proceedings. Before starting legal proceedings against a debtor, assessment of assets is important as it allows verification as to whether the company is still active and whether recovery chances are at best. In addition, it is essential to be aware of the debtor’s solvency status: if insolvency proceedings have been initiated, it indeed becomes impossible to enforce a debt. Since the Civil Procedure Reforms of 2002, entering into conciliation or mediation in order to reach a compromise has become a prerequisite to formal judicial proceedings and the courts tend to request proof that a mediation phase was indeed undertaken before considering the claim any further. As a result, most negotiations with German debtors terminate with an amicable settlement (which may include a payment instalment or a debt write-off) which is generally respected.

Court Proceeding 


As a general rule, business disputes in Germany fall under the jurisdiction of District Courts (Landgerichte) which usually provide specialized divisions in charge for commercial matters (Kammern für Handelssachen), intellectual property or competition. Payment-related legal proceedings are dealt with through the Payment Order Court (Mahngericht) of the district courts. In practice, the amount of the claim conditions jurisdiction but the specialized divisions are rarely approached for collection purposes.

When the debt is certain and undisputed and provided that the debtor’s assets are traceable, German creditors may rely on fast-track Payment Order procedures (Mahnbescheid) before the local Court (Amtsgericht). This is a rapid, efficient and cost-effective (no lawyer is needed) way to obtain an enforcement order (Vollstreckungsbescheid) within a matter of weeks because the procedure is increasingly automatized. Foreign creditors however have no choice but to file a request before the Berlin-Wedding District Court. In each case, the debtor must react within two weeks (i.e. pay its debts or oppose the Order). Any defence raised by the debtor however leads to solving the dispute through a regular lawsuit. If the amicable phase fails or if the debtor questions the claim, the option of starting ordinary legal action (Klageverfahren) remains. Proceedings would usually commence once summons have been served to the debtor. The courts schedule preliminary hearings (Früher Erster Termin) and written proceedings (Schriftliches Vorverfahren) in order to consider the parties' arguments. As previously mentioned, the court would also attempt to set up a conciliation phase (Güteverhandlung) as part of these proceedings. The main hearing would then take place to enable the court to render a judgment. When the debtor company has assets in other EU Member States, a European Payment Order procedure facilitating the recovery of undisputed debts (under Regulation EC No 1896/2006) may furthermore be triggered. In this case, the demanding party may request the Berlin-Wedding District Court to issue an Order to Pay which will then be enforceable in all European Union countries (except Denmark) without exequatur proceedings. Such orders are deemed enforceable after expiry of the opposition period (i.e. 30 days starting from delivery to the parties). In the case of an objection, an ordinary civil process begins

insolvency Proceeding 


A debtor is obliged by law to file a petition for insolvency proceedings within three weeks following the date on which the company has become illiquid or over-indebted. The main purpose of insolvency proceedings (Insolvenzverfahren) in Germany has long been the realization of the debt through the liquidation of the debtor's assets, but rehabilitation proceedings aiming at developing a rescue culture and at supporting viable companies suffering temporary difficulties are increasingly relied upon.


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