Keep Unpaid Invoices Under Control and Avoid Cash Flow Problems

Open invoices are not sales that you can already dispose of. Until the money is received, you must pay wages, rent, materials, insurance and taxes from other means. That's why a current overview of open invoices is one of the most important tools for your liquidity planning.

Good receivables management doesn't just start with the reminder. It combines clear agreements, timely and correct invoices, regular payment reconciliation, friendly payment reminders and consistent escalation. This way you can identify bottlenecks early without immediately turning every late payment into a conflict.

Short rule: Issue invoices immediately, agree on a clear due date, reconcile bank transactions at least weekly and process overdue receivables according to a fixed process.

What is an open invoice?

An invoice is open as long as the customer has not yet paid the invoice amount in full. You should distinguish at least four states:

• open: The invoice has been sent but is not yet due;
• due: The agreed payment date has been reached without the full amount being received;
• overdue: The due date has passed; Whether there is already a legal default in payment depends on the contract, due date rule and Section 286 BGB;
• partially paid or disputed: A partial amount has been received or the customer disputes the service, price or invoice.

This separation prevents two typical mistakes: you don't remind people too early and you don't leave overdue receivables lying around. A OPOS list - a list of open items - should therefore contain invoice number, customer, invoice amount, remaining balance, invoice date, due date, days overdue, last contact and next step.

Why outstanding claims endanger liquidity

Profit and liquidity are not the same thing. Under balance-sheet accounting, a receivable may already increase revenue and profit even though the money has not yet reached the bank account; under the income-surplus method (EÜR), by contrast, taxable operating income generally arises only when payment is received. In both cases, only funds that are actually available count for liquidity. In addition, under accrual-based VAT accounting (Soll-Versteuerung), VAT may become due before the customer pays, whereas under an approved cash-accounting method (Ist-Versteuerung) it generally arises only when payment is received.

A simple example: You issue invoices for 20,000 euros, of which 8,000 euros are paid late. Regardless of how the tax profit is determined, the bank account is missing 8,000 euros for current expenses. The higher the receivables inventory and the average payment period, the more operating resources are tied up.

Therefore, don't plan based on the invoice date, but rather a realistic receipt of payment. Consider known payment delays, taxes, fixed expenses and a safety buffer. A large order pipeline doesn't help if work already done is paid late.

Prevention: Secure payment before the invoice is issued

Receivables management starts with the order. Especially with new customers, large amounts or long projects, you should clarify in advance:

• Who is the exact contractual partner and what is the billing address?
• Who can commission the service and release the invoice?
• Which service, which price and which acceptance process were agreed?
• Does advance payment, down payment, installment payment, milestone invoice or final invoice apply?
• What specific payment deadline applies?
• Does the customer need an order number, cost center, proof of performance or a specific invoice format?

If there are major risks, a down payment, installment payments, shorter billing intervals or an appropriate credit limit may make more sense than a single large final invoice. Cash discounts can promote quick payment, but they cost margin and should be calculated beforehand. When paying in installments, you should record the amount, dates and consequences of a default in writing.

Issue invoices quickly, correctly and clearly

Send the invoice immediately after the service or agreed milestone. Incorrect or incomplete invoices delay approval and give the customer an objective reason for questions.

The regular mandatory information in accordance with Section 14 Paragraph 4 UStG includes, in particular, the full names and addresses of both parties, tax number or VAT identification number of the company providing the service, date of issue, unique invoice number, service description, time of service as well as remuneration, tax rate and tax amount or a reference to tax exemption. Special rules apply to small-value invoices and small businesses.

A payment term is not a mandatory VAT information, but it makes a lot of commercial sense. Formulate a specific date such as “payable by October 15, 2026” instead of just “payable within 14 days”. Also check the recipient, order number, bank details and reference text. Document the shipment, as receipt can be important for due dates and delays.

Classify e-invoicing correctly in 2026

A simple PDF file is not an e-invoice in the legal sense. An e-invoice contains structured data that can be processed electronically; Common formats are XRechnung and ZUGFeRD from a suitable profile.

Since January 1, 2025, domestic companies must generally be able to receive e-invoices. Transitional rules apply when issuing: Until the end of 2026, a paper invoice or - with the consent of the recipient - another electronic invoice such as a PDF can still be used for sales carried out by then. If the invoice issuer's previous year's turnover was up to 800,000 euros, the transition period is extended under the legal requirements until the end of 2027. Small businesses are exempt from the obligation to issue e-invoices, but must be able to receive e-invoices.

For e-invoices, keep the original structured data record. A mere screen view or subsequently generated PDF does not replace the tax-relevant structured file.

The weekly OPOS routine

Reserve a fixed date each week for open items. For small businesses, 20 to 30 minutes is often enough if the process is consistent:

1. Retrieve bank transactions: Completely record all new incoming payments.
2. Assign payments: Match amount, purpose, customer and invoice number. Mark partial payments and collective payments separately.
3. Update status: Close paid invoices; Leave outstanding remaining amounts.
4. Check Due Dates: Sort bills due and overdue today by age.
5. Clarify any uncertainties: Process missing proof of performance, complaints, incorrect addresses or booking errors immediately.
6. Document contact: Record date, channel, contact person, commitment and next step.
7. Update liquidity plan: Only plan expected receipts with realistic dates.

Automatic bank reconciliation can suggest appropriate payments and reduce search work. Still check discrepancies, fees, partial payments, credits and duplicate transfers.

Payment reminders and reminders: escalate sensibly

Before each contact, check whether the invoice has been delivered correctly, the service has been fully provided, there is a complaint or the payment has already been received for another purpose.

A practical process could look like this:

1. Shortly after the due date: Send a friendly payment reminder with invoice number, amount, due date and account details. Please provide brief feedback if documents are missing or payment has already been made.
2. If there is further delay: Send a formal reminder with a new, reasonable payment deadline and a clear announcement of the next step.
3. Clarify in person: Make phone calls to important customers or obvious payment difficulties and document a reliable commitment.
4. Last out-of-court stage: Set the final deadline and announce possible legal action, debt collection or legal dunning proceedings.
5. Enforce: If the claim is undisputed, a court order may make sense. If you have a dispute about performance or defects, you should seek legal advice before incurring costs.

The law does not generally require three reminders. What matters is when the claim is due and when the debtor defaults. Several ineffective standard letters just waste time.

When does late payment occur?

According to § 286 BGB, default generally occurs if the debtor does not pay a reminder after the due date. A reminder may be unnecessary if a specific calendar payment date has been agreed or another legal exception applies.

In principle, a payment claim is in default no later than 30 days after the due date and receipt of the invoice. This 30-day rule only applies to consumers if the invoice expressly states this consequence. If receipt of the invoice is uncertain, special rules apply for non-consumers.

Whether a formulation actually contains a calendar provision and whether the customer's objections are justified depends on the individual case. Therefore, do not automatically confuse “overdue” in your software with “legally in default”.

Interest on arrears, a flat rate of 40 euros and reminder costs

Interest may be charged on a monetary claim during the default. According to § 288 BGB, the statutory default interest rate is:

• if a consumer is involved, five percentage points above the base interest rate;
• for remuneration claims between companies, nine percentage points above the base interest rate.

According to the German Bundesbank, the base interest rate has been 1.52 percent since July 1, 2026. As of this article, this results in 6.52 percent per year for consumer cases and 10.52 percent per year for pure B2B transactions. Since the base interest rate can change on January 1st and July 1st, always check the current value and the relevant delay period for the calculation.

If a customer who is not a consumer defaults, Section 288 Paragraph 5 BGB also provides for a flat rate of 40 euros. Further verifiable damage caused by delay may be possible; The flat rate will be offset against any legal costs owed. Reminder costs may not be set arbitrarily. If in doubt, have the specific claim examined legally.

Partial payments, disputes and payment agreements

A partial payment does not close the invoice. Record the amount received, the outstanding balance and the allocation in a comprehensible manner. Clarify whether the customer is only temporarily short of cash or is paying for part of the service.

When making a complaint, you have to answer three questions:

• What service is undisputedly provided?
• What amount is undisputedly due?
• What rework, reduction or invoice correction is required?

If you agree on installments, document the total claim, amounts already paid, installment amount, dates, bank details and what to do if the installment is missed. If the price changes due to a reduction, discount or comparison, also check the invoice correction and VAT. An installment agreement should not inadvertently contain a further waiver.

If the customer still doesn't pay

Evaluate the amount of the claim, evidence, objections, creditworthiness and costs. Possible steps are:

• judicial dunning proceedings in the event of a quantified, presumably undisputed monetary claim;
• Lawsuit if a substantive contradiction must be expected;
• reputable registered debt collection company or legal support;
• Factoring for eligible receivables when faster liquidity justifies the fees;
• Filing a claim if insolvency proceedings have been opened against the customer's assets.

According to § 195 BGB, the regular limitation period is three years and, according to § 199 BGB, generally begins at the end of the year in which the claim arose and you have knowledge of the claim and the debtor or should have known without gross negligence. Don't rely on a simple payment reminder to stop the statute of limitations. If the deadline is imminent, you need qualified legal advice in good time.

If a claim is actually irrecoverable, a VAT adjustment in accordance with Section 17 UStG may be necessary for taxable sales. Simply making a late payment is not automatically enough. Coordinate the timing and booking with your tax advisor; If payment is made later, it must be corrected again.

Actively plan liquidity instead of just issuing reminders

A OPOS list shows who owes you money. A liquidity plan also shows whether you can make your own payments on time. For the next few weeks, update at least:

• available bank balance and granted credit line;
• secure and probable customer payments with realistic dates;
• Wages, rent, leasing, insurance and suppliers;
• VAT, wage tax, income or corporation tax as well as reserves;
• planned purchases and a security buffer.

Don't treat promised but not yet received payments like bank balances. If a bottleneck is foreseeable, talk to customers, suppliers, banks and tax advisors early on. Early agreements usually offer more flexibility than reactions on the due date.

Metrics that really help

You don’t need complex controlling. Three simple key figures are enough for a reliable overview:

• Open receivables: Total of all invoices that have not yet been paid in full.
• Overdue portion: Overdue amount divided by total outstanding receivables.
• Average payment duration: Days between invoice date or due date and actual receipt of payment - always calculated internally using the same method.

Add an age structure, for example “not yet due”, “1-7”, “8-30”, “31-60” and “more than 60 days overdue”. If the older inventory increases or a large proportion depends on a single customer, your liquidity risk increases.

Open invoice checklist

• Invoices are created immediately after a service or milestone.
• Contractual partner, billing address and approval process are clarified in advance.
• Every invoice is technically and mathematically correct and contains the necessary mandatory information.
• A specific payment date and a unique payment reference are provided.
• Shipping or receipt is clearly documented.
• Bank transactions are reconciled at least weekly.
• Partial, collective and incorrect payments remain visible with the remaining amount.
• Open items are sorted by due date and overdue.
• Payment reminders and formal reminders are linguistically treated separately.
• Customer contacts, commitments and next steps are documented.
• Late payment interest and flat rates will only be charged if the requirements are met.
• Disputed and irrecoverable claims are examined professionally.
• Limitation periods are monitored.
• Liquidity planning uses realistic payment dates and a buffer.

Typical errors

• Check only once a month: An invoice that is due shortly after the beginning of the month goes unnoticed for weeks. Better: compare weekly and use visible clues every day.
• Confuse sales with liquidity: The invoice has been issued, but the money is missing. Better: keep open receivables in the liquidity plan with a realistic receipt date.
• Use unclear payment terms: “Immediately” or “14 days after receipt” can lead to discussions about access and deadlines. Better: contractually agree on a clear date or a clearly calculable deadline.
• A reminder in every case: A booking error needs clarification, a forgotten invoice needs a reminder and a disputed service needs professional processing. Better: Check the cause before escalation.
• Confuse PDF with e-invoice: A PDF does not automatically contain structured invoice data. Better: Use XRechnung or a suitable ZUGFeRD profile if an e-invoice is required.
• Three reminders are mandatory: There is no such general legal obligation. Better: Check due dates and delays and consistently apply your own process.
• Don't notice the statute of limitations until December: Then there is little time for effective steps. Better: check old claims quarterly and clarify critical cases legally at an early stage.

Frequently Asked Questions

How often should I check open invoices?

For small businesses, a fixed weekly payment reconciliation is usually a good minimum standard. If you have a lot of daily payments or tight liquidity, you should check more often. It is crucial that due dates do not only become apparent weeks later.

Do I have to send three reminders?

No. The law does not generally prescribe three levels of warning. Default can occur after the due date through a reminder, at a specific calendar date or, under other conditions, even without a reminder. Check the specific case.

Can I charge default interest immediately?

Default interest generally assumes late payment. The amount and start date depend, among other things, on whether the customer is a consumer or an entrepreneur, when the claim became due and when default occurred.

Is a payment reminder the same as a reminder?

Both are often used similarly in everyday life. For good customer communication, payment reminders are the friendly first stage; a formal reminder makes the requirement, deadline and possible consequences clearer. Legally, it's the content that counts, not just the headline.

What do I do if I make a partial payment?

Match the payment to the correct invoice, document the amount and date, and leave the remaining balance open. Clear up deductions immediately instead of accidentally closing the invoice as paid in full.

When does factoring make sense?

Factoring can accelerate liquidity and partially assume default risks, but costs fees and does not suit every claim. Compare contract, recourse, minimum sales, customer impact and total costs.

How long do I have to keep invoices?

Entrepreneurs must generally keep issued and received invoices in accordance with Section 14b UStG for eight years. The deadline begins at the end of the calendar year of the exhibition. Other documents or special cases may have different deadlines.

How Motorica supports

Motorica brings together invoice status, due date and payment in one place. Bank reconciliation helps with payment allocation, and you can prepare a payment reminder from the invoice overview. This means that paid, open, partially paid and overdue transactions remain traceable.

The software supports organization and documentation, but does not replace legal or tax advice. Whether a default has occurred, interest can be charged or a claim is irrecoverable must be checked in the specific case.

Conclusion

Liquidity problems rarely arise just from too little sales. Existing sales often arrive in the account too late. With clear payment terms, fast invoicing, weekly OPOS and bank reconciliation, staged payment reminders and realistic liquidity planning, you turn open invoices into a controlled process.

Next step

Set a fixed weekly appointment, reconcile all incoming payments and decide on the next concrete step for each overdue invoice.

Organize open invoices in Motorica

In this process, bank transaction reconciliation helps identify every unpaid invoice, while a formal payment demand is a separate step after a friendly reminder.

Sources and status

As of September 26, 2026

• § 14 UStG – Issuance of invoices
• § 14b UStG – Storage of invoices
• § 17 UStG – Correction of bad debts
• § 13 UStG – Origin of VAT
• § 20 UStG – Calculation based on fees received
• § 271 BGB – Due date without specific performance period
• § 271a BGB – Agreements on payment deadlines
• § 286 BGB – Default of the debtor
• § 288 BGB – default interest and 40 euro flat rate
• §§ 195 and 199 BGB – regular statute of limitations
• Federal Ministry of Finance – Questions and answers about e-invoices
• Deutsche Bundesbank – current base interest rate
• IHK Magdeburg – Receivables Management
• IHK Offenbach – Tips for receivables management

This article provides a general overview and does not replace individual legal, tax or business advice. If you have disputed, high, cross-border claims or claims that are close to the statute of limitations, or if the customer is insolvent, you should seek qualified advice.