Late payments and unpaid invoices are a major source of stress for businesses. And for good reason: they are responsible for around a quarter of all bankruptcies.
Late payments are putting pressure on SMEs
Payment discipline among Swiss companies is deteriorating and the data confirms it. According to a recent study, 20.5% of B2B invoices were paid late in Q1 2025, up from 18.5% the previous year. In addition, 80% of companies surveyed in the Coface Economic Observatory 2025 reported experiencing payment delays over the past 12 months.
At the same time, the number of bankruptcies increased by 20% during the first three quarters of 2025 compared to the previous year. This rise is partly due to stricter enforcement of the Swiss Federal Act on Debt Enforcement and Bankruptcy, which came into force on January 1, 2025.
Switzerland is not an isolated case. Similar trends can be observed across Europe: 81% of companies in Germany are affected by late payments, 86% in France, and as many as 90% in the United Kingdom, according to the Coface Payment Survey 2025.
The takeaway is clear: acting quickly on debt collection is essential to protect cash flow both domestically and internationally. In many cases, it can also help avoid lengthy and costly legal proceedings.
How the debt collection process works in Switzerland
In Switzerland, debt enforcement is organized on a decentralized basis. Each canton has its own debt enforcement and bankruptcy office responsible for handling claims, enforcing court decisions, and maintaining official registers. However, since 2011, a unified civil procedure code applies nationwide.
In practice, the debt collection process is divided into two main phases:
- an amicable (out-of-court) phase
- a legal (judicial) phase
The amicable phase
When a debtor fails to meet payment deadlines, it is generally advisable to send a final reminder by registered mail. This step often helps avoid additional costs and more complex procedures.
At this stage, late payment interest may be added to the outstanding amount. By default, this is set at 5% in accordance with the Swiss Code of Obligations (Art. 104), unless a higher rate has been contractually agreed.
In the best-case scenario, the invoice is settled at this point and the case is closed.
Important: In Switzerland, sending a reminder is not mandatory. Creditors can initiate debt enforcement proceedings without prior notice.
The legal debt enforcement process
If the reminder goes unanswered, legal action becomes necessary. Initiating proceedings also suspends the statute of limitations, which is generally five or ten years.
Key steps:
- The creditor files a request with the competent debt enforcement office.
- A payment order is issued and served to the debtor.
- The debtor has 10 days to file an objection, without providing justification. This suspends the process.
- To proceed, the creditor must then take the case to court to validate the claim.
This process can be time-consuming and complex: depending on the canton, proceedings may take between one and three years.
Before going to court, a conciliation or mediation hearing before a justice of the peace is often mandatory. This step may be waived if both parties agree or if the claim exceeds CHF 100,000.
However, if the debt is clearly acknowledged in a signed document, the creditor can request a provisional lifting of the objection. This simplified procedure allows the court to make a decision based on documentary evidence, significantly speeding up the process.
Who pays for debt collection costs in Switzerland?
If the claim is valid, debt collection costs are borne entirely by the debtor. By law, only the principal amount plus 5% default interest can be claimed. However, higher interest rates and reminder fees may apply if they have been contractually agreed.
For creditors, costs remain relatively low as long as the process stays in the amicable phase. However, once legal proceedings are initiated, expenses can rise quickly especially due to legal representation fees.
Outsourcing debt collection to a specialist provider such as Coface can help avoid these costs. In the amicable phase, services are typically charged on a success-fee basis.
If the case escalates to legal proceedings, the costs incurred (including legal fees) are generally re-invoiced to the client.
In all cases, working with professionals significantly increases the chances of recovering outstanding debts early, reducing the need for costly legal action.
International debt collection: a complex challenge
The situation becomes more complex when the creditor is based abroad.
Several challenges may arise:
- debt collection procedures and legal systems can differ significantly
- cultural and business practices must be taken into account
- language barriers can complicate communication
These challenges exist not only in emerging markets but also across Europe and other developed economies.
International debt collection requires strong local expertise and established networks, making it a major challenge for many companies especially SMEs.
In addition, costs and timelines are often difficult to predict, adding another layer of complexity.
Is it worth using a debt collection agency?
Unpaid invoices are more than just a nuisance, they can quickly lead to cash flow issues and, in the worst case, threaten a company’s survival.
This is why working with a professional debt collection agency is often a smart move.
Specialized providers like Coface offer:
- local experts with in-depth market knowledge
- better preservation of client relationships through a third-party intermediary
- outsourced receivables management
- faster processes thanks to on-the-ground expertise
This is particularly important when large amounts are involved or when debtors are located in markets with very different legal systems and business practices, such as China or India. In such cases, local expertise is essential to ensure efficient and reliable debt recovery.
With Coface Debt Collection, recover your debts worldwide.
