Corporate payment default

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.In practice, the payment default entry prevents your company from getting new loans and become even more indebted. 

The payment default entry 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.

The retention periods for payment default entries depend on the basis on which the entry was made. Typically, a payment default entry lasts for two or three years.  For example, a two-year payment default entry may be generated by an unpaid credit card debt. A three-year payment default entry may be generated by payment defaults determined by a court or enforcement authorities, tax claims published by the tax authorities or repayment protests.

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.

To remove a payment default entry from the credit information register, pay your company's debts to the creditor.

Once you have paid the debt, you can ask the creditor to report the payment to the credit information register or send a payment receipt thereof.

The payment receipt must include

• the names of the creditor and the debtor
• payment default case number, record number or date of registration of the payment default
• the date of payment
• the amount paid to the creditor.

The payment default entry is removed from the credit information register 30 days after the payment has been registered.