Demand letter and collection warning

Does a customer, business partner or private individual owe you money and fail to respond to your requests for payment? A correctly drafted demand letter with a debt-collection warning is the necessary first step before you can move on to legal action. If you skip this step, you risk losing the right to claim collection costs.

This guide explains what a demand letter must contain, which deadlines apply, and what you can expect in fees and compensation.

What is a demand letter?

A demand letter (in Danish "påkravsskrivelse", also called an "inkassovarsel" or debt-collection warning) is a formal letter requiring payment of a due amount within a set deadline. The letter is the legally necessary warning before you can hand the case to debt collection or start court proceedings.

A demand letter is not the same as a reminder. A reminder is an informal payment prompt. A demand letter is a legal warning with binding deadlines and consequences if payment is not made.

When should you send a demand letter?

You should send a demand letter when:

• The payment deadline has passed
• You have sent 1-2 reminders with no result
• You wish to hand the case to a debt-collection agency or the enforcement court

Requirements for the content of the demand letter

For the demand letter to be valid and to give the right to claim collection costs, it must meet certain formal requirements under the Interest Act and the Debt Collection Act.

Mandatory elements

1. Identification of the parties

• Your full name/company name and address
• The debtor's full name and address

2. The claim

• The precise amount owed
• The invoice or agreement the claim arises from (invoice number, date)
• Any interest already accrued

3. Payment deadline The deadline for payment must be stated clearly. Under the Debt Collection Act, the debtor must have at least 10 days from the sending of the collection warning to pay before the case can be handed to collection. The deadline applies both to business customers and consumers.

Example wording:

"We hereby give notice that the above amount must be paid to the account below no later than [date, at least 10 days ahead]."

4. Consequences of non-payment State clearly what happens if payment fails to arrive:

• The case is passed to debt collection
• Further fees and interest accrue
• The case can be brought before the enforcement court

5. Payment details State the account number (IBAN/sort code + account number) or MobilePay number.

6. Complaint options For consumer claims: state the relevant complaint options, for example the Danish Competition and Consumer Authority or the relevant complaints board.

Fees you can charge

Danish law gives the right to charge certain fees in connection with late payment and debt collection:

Reminder fee

You can charge DKK 100 per reminder (maximum), but only if:

• The payment deadline has passed
• You send a maximum of 3 reminders in total for the same claim
• There are at least 10 days between the reminders

Collection fee

When the claim is handed over for collection by a third party (external collection, that is a lawyer or a collection agency), an additional collection fee of DKK 100 may be charged. The fee may only be charged once for a combined claim, and only if at least one reminder has first been sent. In self-collection, where you recover the claim yourself, the collection fee cannot be charged.

Compensation amount (business only)

In contractual relationships between businesses (B2B), you may charge a fixed compensation amount of DKK 310 for each invoice that is not paid on time. The amount is independent of the size of the claim and of the number of reminders, and one compensation amount may be charged per invoice.

Collection costs (recovery costs)

If the case is passed to actual recovery, out-of-court collection costs may be charged under the Collection Costs Order. The amount depends partly on the size of the claim and partly on whether you handle recovery yourself (self-collection) or use a lawyer or collection agency (external collection). The size of the claim is calculated as the principal including VAT, without default interest and fees.

Self-collection (you recover yourself, amounts incl. VAT):

Size of claim	Maximum amount
DKK 0 - 1,000	DKK 350
DKK 1,001 - 2,500	DKK 600
DKK 2,501 - 5,000	DKK 800
DKK 5,001 - 10,000	DKK 1,000
DKK 10,001 - 25,000	DKK 1,400
DKK 25,001 - 50,000	DKK 1,700
DKK 50,001 - 100,000	DKK 2,250
DKK 100,001 - 250,000	DKK 3,050
DKK 250,001 - 500,000	DKK 5,100
Over DKK 500,000	DKK 5,100 + 0.67% of the excess

External collection (lawyer or collection agency, amounts excl. VAT):

Size of claim	Maximum amount
DKK 0 - 1,000	DKK 500
DKK 1,001 - 2,500	DKK 850
DKK 2,501 - 5,000	DKK 1,200
DKK 5,001 - 10,000	DKK 1,550
DKK 10,001 - 25,000	DKK 2,050
DKK 25,001 - 50,000	DKK 2,700
DKK 50,001 - 100,000	DKK 3,450
DKK 100,001 - 250,000	DKK 4,650
DKK 250,001 - 500,000	DKK 7,700
Over DKK 500,000	DKK 7,700 + 1% of the excess

These fees are maximum amounts. You can always charge a lower amount.

Default interest

When a payment is overdue, you have the right to default interest under the Interest Act. The rate is set half-yearly and equals the Danish central bank's lending rate (the reference rate as at 1 January and 1 July) plus 8 percentage points. As the reference rate changes, you should always check the current rate before calculating the interest claim.

The interest is calculated from the due date, not from the date of the demand letter. As a rule, interest can be charged once 30 days have passed since the invoice fell due, unless otherwise agreed.

Special rules for consumer claims vs. business claims

There are important differences in what you can charge, depending on whether the debtor is a consumer (private individual) or a business.

Consumer claims

• More protection for the consumer. The reminder fee may not exceed DKK 100, and the total fees may not exceed the order's maximum rates
• You must send at least one collection warning with at least a 10-day payment deadline before you can hand the case to collection
• You must inform the consumer of their complaint options
• The DKK 310 compensation amount does not apply to consumers

Business claims (B2B)

• Freer contractual terms on fees and interest
• The statutory default interest under the Interest Act applies, but the interest rate can be departed from by agreement
• You can charge the DKK 310 compensation amount per overdue invoice
• Shorter deadlines are possible if this is agreed in the terms of sale and delivery

How to draft the collection warning: template

Here is an example of the structure of a collection warning:

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[Your name/company name] [Address] [Postcode and town] [CVR number]

[Debtor's name] [Address] [Postcode and town]

Date: [date]

COLLECTION WARNING, 3rd and FINAL REMINDER

We are writing regarding unpaid invoice no. [X] of [date] for [description of service/goods] totalling DKK [amount].

Despite our earlier reminders, the amount has still not been received.

We hereby demand payment of the following:

Item	Amount
Principal	DKK [X]
Interest (X% from [date] to [date])	DKK [X]
Reminder fees (3 × DKK 100)	DKK 300
Total	DKK [X]

Payment deadline: [date, at least 10 days ahead]

Please pay the amount to: Sort code: [X] Account no.: [X] Marked with invoice no. [X]

If payment is not made by the deadline, the case will be passed to collection/the enforcement court without further warning, and further costs will accrue, which you will be charged.

Kind regards [Signature]

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From demand letter to the enforcement court

If the debtor does not respond to your demand letter, you have two routes:

Debt-collection agency

You can hand the case to an authorised collection agency. The agency takes over recovery and typically works on a commission of the amounts recovered. Be aware that:

• The agency (or the lawyer) must be authorised under the Debt Collection Act. Commercial external collection may only be carried out by lawyers or by collection businesses authorised by the National Police (Rigspolitiet). It is a good idea to check that the agency holds a valid authorisation
• You as a rule keep the right to the claim
• The agency may not threaten or harass the debtor

The enforcement court (direct recovery)

Alternatively, you can file a request for enforcement (attachment) directly with the enforcement court. This requires the claim to be clearly and unambiguously documented.

The enforcement court can:

• Attach the debtor's wages (wage deduction)
• Attach the debtor's property and bank balances
• Hold an enforcement auction with the sale of attached assets

Fee to the enforcement court: A court fee is payable. The basic fee for an ordinary enforcement case is DKK 300, and for a payment order a court fee is payable that depends on the size of the claim. The court fee is as a rule charged to the debtor if the claim is recovered.

Payment order (simplified procedure)

For undisputed claims of up to DKK 100,000, you can use a payment order ("betalingspåkrav"), a simplified procedure at the enforcement court. The procedure is faster and cheaper than ordinary litigation. If the claim exceeds DKK 100,000, you must as a rule bring ordinary proceedings by filing a writ.

Condition: the claim is undisputed, that is the debtor has not objected to it.

Limitation period: act in time

Claims become time-barred after 3 years from the due date (the general limitation period). If you wait too long to recover your outstanding amount, you risk losing the right to claim it.

The limitation period is interrupted by:

• The debtor's written acknowledgement of the debt
• Bringing the matter before the enforcement court or the courts

Practical tip: Keep all invoices, reminders and correspondence with the debtor for at least 5 years, as you may need the documentation in a court case.

Checklist: before you send the collection warning

• The due date on the invoice has passed
• You have sent at least one reminder
• The letter is correctly addressed to the debtor
• The claim is specified (invoice number, amount, interest)
• The payment deadline is at least 10 days ahead
• Your payment details are correct
• The consequences of non-payment are clearly stated

When the debtor disputes the claim

What happens if the debtor disputes the debt, that is claims that the amount is wrong or that they owe nothing at all?

The form of the dispute

A dispute can be made orally, in writing or simply by ignoring your reminders. An actual objection (a written complaint) is more concrete.

What do you do about a dispute?

1. Document your position: Gather everything, including contracts, invoices, delivery documentation and correspondence
2. Assess whether the claim is well founded: Is the debtor's objection justified? It can save time and money to admit a mistake early
3. Consider a voluntary settlement: Can you reach agreement without litigation?
4. Bring the case before the courts: If the objection is groundless, you can bring proceedings before the district court

Payment order for a disputed claim

The payment order (simplified procedure) only works for undisputed claims. If the debtor objects within the deadline, the case is transferred to ordinary handling at the district court. You must then bring actual proceedings and document your claim through evidence.

Debt collection and GDPR: your obligations

If you run a business and send collection letters, you must comply with the GDPR:

• Legal basis: Processing the debtor's personal data for recovery purposes is typically based on legitimate interest (GDPR Article 6(1)(f))
• Erasure: Data on fully paid claims should be erased within a reasonable time
• Data processing agreement: If you use a collection agency, the agency is your data processor, and a data processing agreement is mandatory

Debt collection against foreigners

Does a foreign business or private individual owe you money? That complicates recovery:

• EU cases: The EU Regulation on a European order for payment (Regulation 1896/2006) allows a simplified cross-border collection procedure for undisputed monetary claims
• Outside the EU: Depends on the relevant bilateral agreement and the law of the country concerned
• Practical: A Danish collection agency with international connections can often handle foreign claims

Conclusion

A correct demand letter is the key to getting your money back and to preserving the right to claim collection costs. Meet the formal requirements: a clear statement of the claim, at least a 10-day payment deadline and a clear consequence for non-payment. If the debtor still does not pay, you can move on to debt collection or directly to the enforcement court via a payment order.

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The content of this article is for guidance only and does not constitute legal advice. Consult a lawyer for advice on your specific situation.