Letter of formal notice

In the event of non-payment or non-performance of a service, it may be necessary to send the customer or supplier concerned a letter of formal notice. This usually follows one or more amicable reminder letters, and is the last step before an injunction to pay and legal action. Find out how to do this, and download a sample document.

When should I send a formal notice?

When a customer fails to pay an invoice issued by a company within the allotted time, despite delivery of the goods or performance of the service, the company is entitled to send the customer a letter of formal notice from the end of the due date specified in the general terms and conditions of sale and indicated on the invoice.

From a legal point of view, it is perfectly possible to send a letter of formal notice directly, without first sending a dunning letter. However, to maintain good business relations, it is preferable to start with 2 to 3 successive reminder letters if necessary. In some cases, the customer may simply have forgotten to pay, or may be experiencing temporary financial difficulties.

If your reminder letters have gone unanswered, and the invoice still hasn't been paid, it's time to move on to the next stage: formal notice. This is the last possibility for amicable collection before legal action is taken.

If the company subsequently decides to apply to the court for an injunction to pay, in the absence of any response, it must first send a letter of formal notice. If no letter of formal notice has been sent to the customer, the injunction to pay cannot be issued.

How do you draw up this document?

For a formal notice to have legal force, it must follow certain rules and include a number of compulsory details.

The date on which the letter was written must be indicated, as must the company's contact details and those of the customer. The words "mise en demeure" ("formal notice") must be spelled out in full, and are best included in the letter's subject line.

The letter of formal notice must specify the customer's obligation, whether to pay an invoice or, for example, to provide a service that has not been completed or performed. The invoice number and all references necessary to identify the goods or services in question must be specified.

It is also advisable to remind the customer of the original deadline, and to specify the time allowed for performance. This period must be reasonable and clearly indicated. A period of 8 days from receipt of the formal notice, when it concerns an unpaid invoice, is generally accepted. In the case of an unperformed service, such as work, the period should probably be a little longer.

In the case of unpaid invoices, the letter of formal notice should also mention the consequences of non-payment. This means announcing the forthcoming legal proceedings, if this is the intention of the author of the letter.

Although it is possible to send the formal notice to the addressee simply by post, it is strongly recommended that you send it by registered mail with acknowledgement of receipt. The date shown on the acknowledgement of receipt will be taken into account for the rest of the procedure. You can also ask a bailiff to deliver the letter of formal notice to the customer concerned.

Sample formal notice letter

When is a formal notice not an option?

There are exceptions, which do not allow the courts to recognize the value of a letter of formal notice.

Firstly, if the customer - whether an individual or a company - is based or resides abroad, the procedure is different. In this case, if they reside in a member country of the European Union, a specific form for small claims must be completed. It is also possible to launch a European Payment Order (EPI) procedure.

If you live in a non-EU country, the procedures can be very complex, and you'll need to call in a specialist, such as a bailiff or lawyer, to get the best advice.

The letter of formal notice will also be ineffective if the addressee is a commercial enterprise in a situation of suspension of payments. In this case, the company no longer has the cash flow required to pay its debts. This administrative situation is also known as filing for bankruptcy. The company's debts are then frozen, and invoices due must be declared to the insolvency representative.

The author of a letter of formal notice must also be able to prove that the sums claimed are actually owed to him by the addressee of the letter, by means of a contract or invoice. Last but not least, a letter of formal notice is of no value if it is sent before the end of the payment period initially stipulated in the invoice, contract and/or general terms and conditions of sale.

What to do after a formal notice has gone unanswered?

If the recipient of the formal notice does not respond, and the invoice remains unpaid, legal collection proceedings must be initiated.

A company seeking recovery of an unpaid invoice must obtain an injunction to pay, issued by a judge. Beforehand, it is necessary to draw up and file an application for an injunction to pay with the competent court, which is not the same depending on the nature of the debt.

For unpaid invoices of 5,000 euros or less, you can also use a bailiff to initiate a simplified small claims collection procedure. There is a charge for this procedure, but it is less cumbersome than obtaining an injunction to pay.