Corporate payment default
Your company will get a payment default entry if it fails to pay its invoices despite receiving payment reminders and demands for payment. A payment default entry will damage your company's reputation and make its operations more difficult. The payment default entry is usually kept in the credit information register for between two and four years, while a bankruptcy entry will be kept there for five years. For corporate reorganisations and business prohibitions, the length of time depends on the case.
If your company fails to pay an invoice, you will first receive a payment reminder, followed by a demand for payment. If your fail to pay the invoice within ten days of the date on which the demand for payment was sent, your company will usually receive a payment default entry in the credit information register. A situation where the creditor has received a court decision on the payment failure will also lead to a payment default entry.
In practice, the payment default entry will usually be made two months after the due date of the unpaid payment at the earliest.
Your company may also get a payment default entry even if you have agreed on payment arrangements with your creditors. However, not all creditors require an entry especially if the debt in question is small in size.
The party maintaining the credit information register will notify your company of your first payment default entry. The notification gives the amount of the debt, the name of the creditor and the date on which the payment default entry is removed from the credit information register.
You can find out the information on your company and the persons responsible for running it that is kept in the credit information register.
The purpose of the payment default entry is to warn others of your company's payment defaults. The entry tells others that they take a higher risk if they for example sell your company items against an invoice or grant you a loan.
In practice, the payment default entry prevents your company from getting new loans and become even more indebted. It limits your company's operations in many ways because managing daily matters becomes more difficult. For example, the credit feature of your company's bank card may be terminated, getting a telephone connection is more complicated and concluding agreements in general becomes more difficult.
Taking out an insurance policy becomes problematic or even impossible. An insurance company is not required to grant voluntary insurance policies if it feels that your company's solvency is not on a solid basis due to its payment default.
Your company's reputation will also suffer and getting new customers and partners becomes more difficult. In the worst case, a payment default entry may make it impossible for you to continue your business.
Depending on its type, a payment default entry will be kept in the credit information register for between two and four years.
A payment default entry lasting for two years usually results from the payment defaults directly reported by the creditor to the credit information register. They may be connected with such matters as credit card payments or instalment purchase contracts made by your company.
A payment default entry lasting for three years usually results from payment defaults determined by a court or enforcement authorities. They may include unpaid value- added taxes published by the Finnish Tax Administration or a bill of exchange protest resulting from a failure to pay an invoice.
If your company gets new payment default entries, the duration of the existing entries in the credit information register may be extended to four years. If, on the other hand, you manage the payments causing the entries quickly and your company does not get new entries, the time may be shortened to two years.
The details of the bankruptcy of a company are usually removed from the credit information register within five years of the start of the bankruptcy proceedings. If the bankruptcy petition has been rejected, has not been investigated or the bankruptcy proceedings have been ordered to be reversed, the information is removed within one month of the date on which the same information has been removed from the register of bankruptcy and reorganisation proceedings.
The details of a corporate reorganisation are removed from the credit information register within one month of the date on which they have been removed from the official register from which they have originated.
The details of a business prohibition are removed from the credit information register within three years of the date on which they have been removed from the official register from which they have originated.