How to Collect a Debt From a German Company: A 2026 Guide for Foreign Creditors

Default rules, 10.52% late-payment interest, the €40 flat fee, late defect complaints and the German court payment order — and how to write a demand that survives a second opinion.

Sophie builds solar-panel mounts in Toronto. A distributor in Düsseldorf bought €62,000 worth, and four months later had paid nothing. INTERCOL sent one letter, in German, with the interest, the fees and a fourteen-day deadline.

The managing director had a plan. He asked his AI assistant how to get out of paying. The AI calmly explained the interest, the flat fee, the rules on complaining about defects and what a court payment order would do. Then it told him to pay. He argued three more times. The answer did not change. The money arrived on Thursday.

Sophie, Klaus and the distributor are fictional. The lesson is not. Your debtor will read your demand letter, and increasingly a second reader will check it too. This guide explains how to collect a debt from a German company when you are based abroad, and how to write a demand that holds up when someone asks an AI whether it is right.

This article is general information, not legal advice.

Your letter now has a second reader

Anthropic publishes the Anthropic Economic Index, an open dataset that matches anonymised Claude conversations to the job tasks they resemble. It measures observed AI usage by task, not who the users are, and it cannot show trends over time. Read with that framing, the May 2026 release is striking for anyone who writes demand letters.

Tasks commonly done by credit counsellors rank 14th of 718 occupations by share of usage. The task of explaining credit, bankruptcy, consumer-protection law and collection actions is 93% hands-on — the person stays actively involved — and 86% of those conversations are learning-style. People are asking AI to explain the rules to them.

For a creditor, that cuts both ways. A vague or exaggerated letter can be picked apart in minutes. A precise one — correct interest, correct fees, correct procedure, a realistic deadline — gets confirmed. That is the standard every demand to a German company should meet.

Step 1: Know exactly who owes you

Start with the German commercial register (Handelsregister), which can be searched online free of charge. Confirm:

The exact legal name and form. A GmbH is a limited company; a UG (haftungsbeschränkt) is a limited company that may have very little share capital; an AG is a stock corporation; a GmbH & Co. KG is a partnership whose liable partner is a limited company. The form tells you whose assets stand behind the debt.
The registered seat and address. Court documents must reach the right entity at the right address.
The managing directors (Geschäftsführer). These are the people who sign payments, and the people your letter should reach.
Insolvency status. Check the official insolvency announcements before you escalate. If proceedings have opened, your claim must be filed with the insolvency administrator rather than chased directly.

For debtors that change names, move addresses or shift business into new entities, a proper debtor investigation is worth doing before anything else.

Step 2: Understand when the debtor is in default

German law draws a clear line between a payment that is simply late and a debtor that is legally in default (Verzug), because default is what triggers interest and costs.

A business debtor is in default once a reminder (Mahnung) has been sent after the payment fell due. It is also in default without any reminder at the latest 30 days after the due date and receipt of the invoice. If the contract sets a calendar date for payment, default begins the day after that date passes.

In practice, one clear, dated written demand removes any doubt about when default began.

Step 3: Add what German law lets you claim

Once the debtor is in default, German law adds meaningful amounts to the invoice:

Default interest of 9 percentage points above the base rate for transactions without a consumer. The base rate has been 1.52% since 1 July 2026, so default interest is currently 10.52% a year. The base rate is reset every 1 January and 1 July, so interest on a long-running debt is calculated period by period.
A flat fee of €40 for late payment, which is set off against any further collection costs you claim.
Reasonable costs of recovery, including legal costs, where the debtor's default caused them.
A higher contractual rate if your terms validly provide for one.

One important caveat for foreign creditors: these rules apply where German law governs the contract. International sales of goods between companies in different countries are often governed by the UN Convention on Contracts for the International Sale of Goods (CISG), to which Germany, Canada, the United States and many other countries belong. The CISG entitles a seller to interest on late payment but does not fix the rate, so the answer depends on your contract and the applicable law. Check before you put a number in a letter.

Step 4: Write the letter that survives a second opinion

A demand to a German company should be in German, factual and complete. It should contain:

The exact legal name, register details and address of the debtor.
Each invoice, with its number, date, due date and amount.
The legal basis for default, and the interest and flat fee claimed, with the rate and the period.
Bank details and a payment reference.
A clear deadline — fourteen days is common — and the next step you will actually take if it passes.
No threats you cannot carry out. German courts and German debtors take accuracy seriously. So, it turns out, do their AI assistants.

This is exactly the letter Klaus's AI checked, line by line, before recommending that he pay.

Step 5: Watch for late defect complaints

A common delaying tactic is the sudden quality complaint, raised months after delivery. German commercial law is unusually clear on this. In a sale between two merchants, the buyer must inspect the goods without undue delay after delivery and notify any defect promptly. If it does not, the goods are generally treated as accepted, except for defects that could not have been found on inspection, which must be reported promptly once discovered.

The CISG contains a similar duty: the buyer must examine the goods within as short a period as is practicable and give notice of a lack of conformity within a reasonable time.

Your evidence decides these disputes: delivery notes, signed receipts, inspection records and the date of the first complaint, if there was one. Keep them together from day one.

Step 6: Use the court payment order

If the letter does not work, Germany offers a fast, largely written procedure for money claims: the court payment order procedure (gerichtliches Mahnverfahren).

Application. The creditor applies for a payment order (Mahnbescheid), usually online. Creditors with no general place of jurisdiction in Germany apply to the central court in Berlin-Wedding.
Objection window. Once the order is served, the debtor has two weeks to object (Widerspruch).
Enforcement order. If there is no objection, the creditor applies for an enforcement order (Vollstreckungsbescheid). The debtor can still file an objection (Einspruch) within two weeks of service; if it does not, the order becomes an enforceable title.
Disputed claims move into ordinary court proceedings, which take longer and are where a well-documented file pays off.
Costs. As a general rule, the losing side pays the costs of the proceedings, including the other side's statutory lawyer fees.

Creditors based in another EU member state can also use the European Payment Order, a similar procedure available across the EU (except Denmark). For creditors in Canada, the US, the UK and elsewhere, the German procedure is the usual route.

Step 7: Enforcement and time limits

With an enforceable title, enforcement is carried out through bailiffs (Gerichtsvollzieher) and the enforcement courts, including the garnishment of bank accounts and receivables owed to the debtor. Which measure works best depends on what the debtor owns, which is why knowing the company matters from Step 1.

Do not let the clock run out. The standard limitation period in Germany is three years, and it starts at the end of the year in which the claim arose and the creditor knew the relevant facts. An invoice that fell due in 2026 will usually become time-barred at the end of 2029. Applying for a payment order suspends the limitation period.

A quick checklist

Confirm the legal name, form, directors and insolvency status.
Establish the default date: due date, reminder, or 30 days after the invoice.
Calculate interest at 9 points above the current base rate, plus the €40 flat fee — or check the CISG and your contract.
Send a precise, German-language demand with a fourteen-day deadline.
Keep delivery and inspection evidence ready for late defect claims.
Escalate to the court payment order if the deadline passes.
Track the three-year limitation period.

How INTERCOL recovers debts from German companies

INTERCOL is an in-house international collections team, with no brokers and no subcontracted networks. For creditors in Canada, the United States and around the world, we check the debtor, calculate what German law allows you to claim, and send a formal demand in German that states the facts precisely. It is the kind of letter that survives a second opinion from a lawyer, a finance director or an AI. When a debtor still does not pay, we escalate through legal recovery.

We work on a no cure, no pay basis: if we do not recover, you do not pay a commission. See our Germany page and our guide to recovering unpaid B2B invoices in Europe, or tell us about your case for a free assessment.

Frequently asked questions

How much interest can I charge a German company that pays late?

Between businesses, German law provides default interest of 9 percentage points above the base rate. With the base rate at 1.52% since 1 July 2026, that is 10.52% a year, plus a €40 flat fee. These rules apply where German law governs the contract; under the CISG the rate depends on the applicable law.

When is a German company legally in default?

After a reminder sent once payment is due, or at the latest 30 days after the due date and receipt of the invoice. If a calendar payment date was agreed, default starts the day after it passes.

Can a German buyer refuse to pay by complaining about quality months later?

Between merchants, German commercial law requires prompt inspection and prompt notice of defects. A complaint raised months after delivery, for a defect that inspection would have revealed, will usually fail. Keep your delivery and inspection records.

How does the German court payment order work for foreign creditors?

The creditor applies for a payment order, usually online; creditors without a German place of jurisdiction apply to the central court in Berlin-Wedding. If the debtor does not object within two weeks, the creditor can obtain an enforcement order, which becomes enforceable if no objection follows.

How long do I have to collect a debt from a German company?

The standard limitation period is three years from the end of the year in which the claim arose and the creditor knew the relevant facts. Applying for a payment order suspends it.

Henrik Lindgren writes for INTERCOL on European commercial recovery. Data: Anthropic Economic Index (May 2026 release), observed Claude usage by task, CC BY 4.0 — anthropic.com/economic-index. All characters in the film are fictional.