29 August 2019

You have founded a startup company and you want to conquer the market with a great product or service. When the first customers don't pay on time, however, menacing clouds are starting to appear on the horizon. Failing incoming payments can squeeze your cash flow and, as a result, you might become unable yourself to settle all your payments on time. In either case, taking an efficient approach conscious of the legal framework gives you a big advantage.

The right offer and invoice

For each of your services and products, prepare a clear offer, which the customer needs to sign and return to you.

Issue the invoice as soon as possible after delivering the product or service. The invoice should include all information contained in the offer (parties, product/service, price) as well as the following:

  • Date of delivery or performance and date of invoice;
  • Payment period (e.g. "payable net within 30 days of invoice date");
  • Payment options (e.g. transfer to bank account).

Efficient reminder scheme

If the customer does not pay on time despite clear payment specifications, we recommend the following step-by-step plan:

  • 10 days after the non-payment, send the customer a "friendly reminder" and grant him/her an additional time period of about 20 days. Enclose a copy of the invoice.
  • After the deadline has passed, send a 1st formal reminder. Refer to the friendly reminder and set a new time period of 10 days. Also, ask the customer for an explanation.
  • After the second deadline has passed, send a 2nd reminder by registered mail, with a final extension of 10 days. Only threaten to initiate debt enforcement proceedings, however, if you really plan to do so.

As part of this reminder scheme, it is important to gradually increase the pressure on the debtor. Therefore, alongside the reminders, contact the customer by phone and ask why the payment could not be done.

If it becomes clear that the customer is unwilling to pay, do not hesitate to initiate enforcement proceedings. By contrast, if the customer turns out to be unable to pay, it may be advisable to write off the amount in order to avoid further costs and expenses.

Well-managed debt enforcement proceedings

  1. To initiate debt enforcement proceedings, you have to file a corresponding application with the competent debt enforcement office. For this end, go to the online debt enforcement portal (only German, French, Italian) of the Swiss Federal Office of Justice and follow the guidelines to fill in the necessary form. Indicate as debtor the natural person or the legal entity that is your contractual partner. For private individuals and sole proprietorships, the enforcement application has to be filed with the debt enforcement office at the debtor's domicile, and for legal entities, with the debt enforcement office at the company seat according to the commercial register (the right company seat can be found at
  2. As a creditor, you are obliged to advance the proceedings costs. If the amount exceeds CHF 500 (up to CHF 1,000), a fee of CHF 53.30 must be paid to the office issuing the summons to pay. For an amount between CHF 1,000 and CHF 10,000, you have to pay a fee of CHF 73.30.
  3. The debt enforcement office sends the debtor the summons to pay based on the information provided by the creditor, without any further examination of the claim.
  4. Within 10 days, the debtor can file an objection against the summons to pay in order to block the debt enforcement proceedings. This does not require a specific form: for example, ticking the box "objection" on the summons to pay and sending it back to the debt enforcement office is sufficient.
  5. At this stage, as a creditor, you must consider whether or not to continue the proceedings – seek legal advice if needed. If you have a written recognition of debt (e.g. a signed offer), it is relatively easy to set aside the objection through summary proceedings. Without any written recognition of debt or any conclusive evidence, however, you must assert your claim in ordinary civil proceedings, which is generally not worthwhile for a claim below CHF 10,000.

Tip: In order to enforce a monetary claim, you do not necessarily have to go to a civil court, but rather you may directly initiate debt enforcement proceedings.

What to do in case of justified debt enforcement proceedings?

If you are unable to meet a payment deadline due to a squeeze in your cash flow, it is best to react quickly after the first reminder: negotiate with the creditor before he/she takes legal action and suggest a payment schedule.

If, nevertheless, debt enforcement proceedings are initiated against you, check first whether the claim is due and correct (creditor, amount, foundation). If so, pay the amount to the debt enforcement office as soon as possible.

If you are unable to settle the debt immediately, seek a solution with the creditor and require that he/she suspend or cancel the debt enforcement proceedings.

Beware: If the claim was due at the time of the initiation of the debt enforcement proceedings, an entry in the debt enforcement register remains visible for 5 years despite a subsequent cancellation of the debt enforcement proceedings.

What to do in case of unjustified debt enforcement proceedings?

If debt enforcement proceedings are initiated against you without any valid ground, file an objection first. In order to delete the entry in the debt enforcement register, you should then immediately ask the creditor to cancel the debt enforcement proceedings on the ground that the claim did not (no longer) exist when the debt enforcement proceedings were initiated. If he/she refuses to comply, you must file a costly declaratory action before the ordinary civil court for the deletion of the entry.

Exception: If you have objected to the debt enforcement proceedings and the creditor does not continue them within 3 months after reception of the summons to pay, you can request the debt enforcement office not to disclose the debt enforcement entry to third parties.

Tip: Obviously harassing debt enforcement proceedings are null and void and can be challenged by means of an appeal to the supervisory authority within 10 days after the reception of the order for payment. The appeal procedure is free of charge and can also be used to challenge formal errors in the application for debt enforcement (such as false information on the debtor).

Do you have any questions regarding payments? Our startup desk or our experts of the restructuring and insolvency team will be happy to advise you.

Authors: Christian Wyss, Adrien Clinard

Topics: Debt enforcementPaymentDebtor managementReminderInvoice


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