Late payments: a major challenge for Swiss SMEs
Late payments are one of the biggest challenges for Swiss SMEs and freelancers. Statistics show that around 30% of invoices in Switzerland are not paid on time, and average payment times often exceed 40 days. For small businesses, these delays can threaten cash flow and even the survival of the company.
This guide walks you through effective payment reminders and, if necessary, how to initiate formal debt collection proceedings under the Swiss LP/SchKG (Federal Act on Debt Enforcement and Bankruptcy). For more on managing payment deadlines, see our article on payment deadlines in Switzerland.
Payment reminders: best practices
Before initiating formal debt enforcement, it is customary (and recommended) to send reminders to your debtor. Here is the standard progression in Switzerland:
1st reminder: the friendly reminder
- When to send: 5 to 7 days after the due date
- Tone: polite and courteous, assume an oversight
- Content: remind the invoice number, amount, due date and attach a copy of the invoice
2nd reminder: the firm reminder
- When to send: 15 to 20 days after the 1st reminder
- Tone: firmer but still professional
- Content: mention this is a second reminder and set a new deadline (usually 7 days)
3rd reminder / Formal demand
- When to send: 10 to 15 days after the 2nd reminder
- Tone: formal, announce consequences
- Content: explicitly state that debt enforcement proceedings will be initiated without payment
- Delivery: by registered post (proof of receipt)
Tips for effective reminders
- Automate: use invoicing software to schedule automatic reminders
- Document: keep a record of every reminder sent (dates, content)
- Stay professional: even when frustrated, maintain a courteous tone
- Offer solutions: in case of client financial difficulty, consider an instalment plan
- Communicate: a phone call is often more effective than an email
The Swiss debt collection system (LP/SchKG)
Overview
The Federal Act on Debt Enforcement and Bankruptcy (LP, or SchKG in German) governs the forced recovery of debts in Switzerland. It is a system unique in the world for its simplicity and accessibility: any creditor can initiate proceedings without a lawyer and without having to prove the existence of the debt at the outset.
Two enforcement routes
-
Enforcement by seizure (Betreibung auf Pfändung): for individuals and businesses not registered in the Commercial Register. Proceeds from seized assets are used to reimburse the creditor.
-
Enforcement by bankruptcy (Betreibung auf Konkurs): for entities registered in the Commercial Register. Can lead to the liquidation of the debtor's business.
Steps in the debt enforcement procedure
Step 1: Application for enforcement (Betreibungsbegehren)
The creditor files an application for enforcement with the Debt Collection Office at the debtor's place of residence or registered office. This can be done:
- Online via the e-LP (eSchKG) portal
- By post to the relevant Debt Collection Office
- In person at the counter
Required information:
- Full identity of creditor and debtor
- Amount of the claim
- Cause of the claim (e.g. "invoice no. 2026-0042 dated 15.02.2026")
- Any interest claimed
Cost: varies by amount (CHF 7 to CHF 40 for typical claims), advanced by the creditor but recoverable from the debtor.
Step 2: Payment order (Zahlungsbefehl)
The Debt Collection Office serves a payment order on the debtor. This official document informs the debtor that enforcement proceedings have been initiated and gives them the opportunity to respond.
The debtor has 20 days to:
- Pay the claimed amount
- File an objection (contest the claim)
- Do nothing (enforcement proceeds)
Step 3: Objection and setting aside
If the debtor files an objection, enforcement is suspended. The creditor must then obtain the setting aside of the objection:
- Definitive setting aside: if you have an enforceable judgment or debt acknowledgement
- Provisional setting aside: if you have a signed debt acknowledgement (signed contract, confirmed purchase order)
- Action for debt recognition: if you have neither a judgment nor a debt acknowledgement, you must open court proceedings
Step 4: Continuation of enforcement
Once the objection is set aside (or if no objection was filed), the creditor may request the continuation of enforcement within 1 year from the service of the payment order.
For seizure: the office seizes the debtor's assets and income (salary, bank accounts, movable property).
For bankruptcy: the creditor may request the debtor's bankruptcy. All of the debtor's assets are liquidated to pay creditors.
Important legal deadlines
| Step | Deadline |
|---|---|
| Objection to payment order | 20 days from service |
| Request for continuation | 1 year from service of payment order |
| Statute of limitations (general) | 10 years (5 years for periodic claims) |
| Validity of payment order | 1 year without continuation request |
| Realisation period (seizure) | 6 months to 2 years depending on assets |
Costs of debt enforcement proceedings
Enforcement fees are regulated and depend on the amount of the claim:
| Claim amount | Payment order fee | Continuation fee |
|---|---|---|
| Up to CHF 500 | CHF 7 | CHF 7 |
| CHF 500-1,000 | CHF 10 | CHF 10 |
| CHF 1,000-10,000 | CHF 20 | CHF 20 |
| CHF 10,000-100,000 | CHF 40 | CHF 40 |
| Over CHF 100,000 | CHF 80 | CHF 80 |
These fees are advanced by the creditor but are charged to the debtor. They are added to the original claim amount.
How to prevent late payments
The best strategy is prevention:
Before the sale
- Check creditworthiness of new clients (commercial register, debt register extract)
- Establish clear terms and conditions including payment deadlines and consequences of late payment
- Request deposits for large projects (30-50% is common)
During the business relationship
- Invoice promptly: send invoices as soon as delivery or service is complete
- Set short deadlines: 10-30 days is the norm in Switzerland
- Use QR-invoices: they facilitate payment and accelerate collection
After the due date
- React quickly: send the first reminder as soon as the deadline passes
- Escalate progressively: friendly reminder → firm reminder → formal demand → enforcement
- Document everything: keep records of every communication in case of legal proceedings
Automating reminders with To Bill
To Bill automates payment reminder management:
- Real-time tracking: instantly see which invoices are paid, pending or overdue
- Automatic reminders: configure reminders at regular intervals after the due date
- Customisation: adapt the text and tone of each reminder level
- Complete history: keep a record of every reminder sent
- Notifications: receive an alert as soon as a payment is received
- Integrated QR-invoice: facilitate payment with a compliant QR payment slip
Don't let late payments affect your cash flow. Try To Bill free for 7 days at app.tobill.ch.
FAQ
Can I initiate enforcement without sending reminders?
Yes, legally no prior reminder is required. You can file an application for enforcement as soon as the invoice is due. However, sending reminders is good business practice that preserves the client relationship.
How much does enforcement cost?
Fees depend on the claim amount (CHF 7 to CHF 80 for the payment order). These fees are advanced by the creditor but recoverable from the debtor. Judicial setting aside of an objection incurs additional court fees.
What if the debtor objects?
You must apply to the court for the objection to be set aside. If you have a signed debt acknowledgement (signed contract, confirmed order), provisional setting aside is generally granted quickly.
Does enforcement appear on the debtor's record?
Yes, every enforcement is recorded at the Debt Collection Office and appears on the debtor's extract for 5 years after payment or 20 years if unpaid. This can affect the debtor's reputation and credit.
Can I claim default interest?
Yes, the statutory default interest rate in Switzerland is 5% per year (art. 104 CO). It runs from the day after the due date, without a formal demand being necessary if a payment deadline was set.
What happens if the debtor is insolvent?
If the debtor has no seizable assets, the Debt Collection Office issues a certificate of loss. This document allows you to re-initiate enforcement later if the debtor's situation improves. The certificate is valid for 20 years.
Do I need a lawyer for enforcement?
No, enforcement proceedings can be initiated without a lawyer. This is one of the advantages of the Swiss system. However, if the debtor objects and you must go to court for setting aside, legal assistance is recommended.