Reminder fees are something many people encounter once an invoice has not been paid on time. For companies, they are a tool to at least partially offset costs arising from late payment. For customers, however, they often appear surprising or even inappropriate.

But how high may reminder fees be? When are they legally permissible? And how can they be properly integrated into the reminder process from an organizational perspective? This article provides an overview of the legal framework, common practice, and practical recommendations for handling reminder fees.

What are reminder fees?

Reminder fees are flat-rate charges that a creditor may bill to a debtor in addition to the outstanding invoice if the debtor is in default of payment. They are intended to cover the effort involved in drafting, sending, and managing reminder letters.

Reminder fees are not considered a penalty, but rather compensation for actual administrative costs incurred, such as personnel time, postage, or printing costs.

When may reminder fees be charged?

A basic prerequisite for charging a reminder fee is that the debtor has entered into default. This applies in the following cases:

• A specific payment deadline was agreed and has been exceeded, or

• A proper invoice has been issued, and no payment has been made 30 days after receipt of the invoice (Section 286 German Civil Code (BGB))

For consumers, the invoice must explicitly state that default occurs after 30 days; otherwise, the onset of default is delayed accordingly.

A first payment reminder without a fee is standard practice and legally unproblematic. From the second reminder onward, a reminder fee may be charged—provided it is reasonable.

What amount is permissible?

There is no legally fixed amount for reminder fees. However, courts set strict limits: the fee must be proportionate and understandable and must not be used to generate profit.

Common in practice:

• 2nd reminder: €2 to €5

• 3rd reminder: up to €7.50 to €10

Higher amounts may be permissible if the increased effort can be specifically documented (e.g., special communication, registered mail, legal review).

What is not legally permitted?

The following reminder fees or methods are legally problematic or impermissible:

• Disproportionately high flat rates, for example above €10 without justification

• Multiple fees for the same reminder stage

• Combining multiple fee components (e.g., reminder fee + processing + postage) without itemized evidence

• Hidden contractual penalties instead of transparent flat-rate reminder charges

A notice in general terms and conditions or on invoices alone does not justify an excessive fee. The key principle always applies: the reminder fee must objectively reflect the actual effort involved.

How many reminder stages are advisable?

In Germany, a three-stage reminder process has become established:

1. Payment reminder – friendly, no fee

2. 1st reminder – with notice of default and fee

3. Final reminder – announcement of further action (e.g., debt collection, court order for payment proceedings)

Such a graduated process gives the customer an opportunity to pay, signals seriousness, and at the same time meets legal requirements.

Reminder fees in practice: recommendations

• Transparency: Indicate potential reminder fees in your terms and conditions or order confirmation from the outset

• Proportionality: Do not set excessive flat rates—if in doubt, choose a lower amount

• Documentation: Every reminder and fee should be traceably recorded in your system

• Communication: Reminder letters should be clearly worded, courteous in tone, and legally compliant

• Digitalization: Automated systems help monitor deadlines, assign reminder fees correctly, and avoid errors

Digital support in accounts receivable management

Many companies now rely on digital solutions to manage reminder processes efficiently, in a standardized way, and with legal certainty. Such software can, among other things:

• Automate reminder runs

• Monitor due dates

• Integrate reminder fees in compliance with applicable rules

• Simplify handovers to debt collection or court order for payment proceedings

One example of such a solution is KLEVERBILL – software for invoice and receivables management that is particularly suitable for companies that regularly issue invoices with payment terms and want to minimize payment defaults.

Reminder fees are generally permissible as long as they are proportionate, objectively justified, and applied correctly. They are a legitimate means of covering administrative effort and reinforcing payment obligations.

However, companies seeking to charge reminder fees should ensure legal compliance and a structured implementation. Digital solutions such as KLEVERBILL can support businesses in making reminder processes efficient, transparent, and customer-friendly.