Glossary - Everything you should know about debt management
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In our comprehensive glossary, you will find all essential terms and abbreviations related to debt management. This reference guide makes it easier for you to use the incaseof.law platform and helps you navigate the complex environment of debt collection, with concise definitions, illustrative examples, and practical best practices.
A
Write-off: Accounting measure for the reduction in value of receivables that are likely no longer collectable (also referred to as "value adjustment").
Suspension of the statute of limitations: Temporary interruption of the limitation period while certain legal or contractual grounds for suspension exist.
GTC (General Terms and Conditions): Pre-formulated contractual conditions that one party to a contract presents to the other upon conclusion of a contract.
Data Processing: refers to the collection, processing, or use of personal data by a service provider on behalf of a controller.
Quick Overview:
Binding nature of instructions: The processor acts exclusively according to the instructions of the controller.
No own purposes: The processor does not use the data for its own purposes.
Legal basis: Requires a written data processing agreement (Art. 28 para. 3 GDPR).
Responsibility: The responsibility for data processing remains with the client.
Example: A company transfers the processing of its customer data to an external service provider. The service provider acts only on the instructions of the company and does not use the data for its own purposes.
Out-of-court debt collection: The process of collecting receivables without involving the court, usually through payment reminders and demands for payment (collection orders).
B
Conditional Order for Payment (Bedingter Zahlungsbefehl): The judicial order for payment resulting from a dunning action bears the inscription "conditional order for payment". It instructs the defendant to pay the claim including interest within 14 days or to file an objection within four weeks.
Credit Check (Bonitätsprüfung): An assessment of a debtor's creditworthiness, usually by obtaining commercial information, which serves, for example, to estimate the risk of litigation costs.
B2B (Business-to-Business): Business relationships between two companies, as opposed to business relationships between companies and end consumers (B2C - Business-to-Consumer).
D
Document AI: Artificial intelligence for the automated recognition and processing of document content, such as invoices and contracts.
Doubtful Debt Collection (Dubioseninkasso): The collection of receivables that are classified as doubtful or at risk, usually because they are difficult or impossible to realize.
E
Electronic Legal Communication (ERV): Electronic Legal Communication (ERV) is a system that enables the electronic and secure transmission and reception of all initial and subsequent submissions (such as lawsuits, statements of defense, motions, pleadings, appeals, and filings of claims) including attachments to and from Austrian courts and public prosecutor's offices (initial submissions only).
European Payment Order Procedure: A simplified judicial procedure for the cross-border collection of undisputed monetary claims within EU member states (excluding Denmark). Under Sec. 252(2) of the Austrian Code of Civil Procedure (ZPO), the District Court for Commercial Matters Vienna (Bezirksgericht für Handelssachen Wien) has exclusive jurisdiction for conducting the European Payment Order Procedure in Austria.
Execution (Exekution): The legal enforcement of a titled claim, for example, through the attachment of bank accounts or income, using state-sanctioned coercive power.
Application for Execution (Exekutionsantrag): An application filed with the court to carry out a compulsory enforcement measure (execution against receivables, execution against movable property, execution against real estate). Applications for execution do not require legal representation by a lawyer, regardless of the amount of the claim being pursued.
F
Case Creation (Fallerstellung): The opening of a debt collection case, including the recording of all relevant data and documents.
Due Date (Fälligkeit): refers to the point in time at which a claim becomes legally enforceable and the debtor is obligated to perform. The due date can be stipulated in the contract. For example: "Payable within 30 days of the invoice date." Without a contractual provision, the statutory regulation applies, e.g., in the ABGB (General Civil Code). From the due date onwards, the creditor may demand fulfillment of the claim. Default occurs if the debtor does not perform despite the claim being due.
Example:
A customer receives an invoice on January 1st with a payment term of 30 days. The claim is due on January 31st. From that point on, the creditor can demand payment and initiate legal action in the event of non-payment.
This point in time is crucial for debt management, as a claim can only be enforced once it has become due. Debt collection service providers like incaseof.law exclusively accept due and undisputed claims for collection.
Claim (Forderung): Legal entitlement of the creditor against the debtor for the performance of a service, usually in the form of a monetary payment.
Settlement of Claim (Forderungsausgleich): Payment of the owed amount by the debtor, whereby the claim is considered fulfilled.
Demand Letter (Forderungsschreiben): Written demand for payment sent to the debtor, detailing the outstanding claim.
G
Judicial Dunning Procedure (Gerichtliches Mahnverfahren): A legal process in which a creditor can enforce an undisputed claim through the court, typically in the form of a dunning action (Mahnklage).
Court Fees (Gerichtsgebühren): Fees incurred for the use of judicial services, regulated by the Austrian Court Fees Act (GGG).
Jurisdiction (Gerichtsstand): The location where a court case is heard. This can be determined contractually or governed by statutory regulations.
Creditor (Gläubiger): A person or company that holds a claim against a debtor and is entitled to demand its fulfillment.
H
Liability (Haftung): Legal responsibility for damages or losses that could arise in connection with the performance of debt collection services.
I
Debt Collection (Inkasso): Service for the collection of outstanding receivables on behalf of a creditor.
Debt Collection Agency (Inkassobüro): A company specializing in the collection of overdue receivables, usually commissioned when internal dunning processes remain without the desired success (payment). Collection agencies are only permitted to accept undisputed claims for recovery.
Collection Costs (Inkassokosten): Fees incurred for the use of debt collection services, which in many cases must be borne by the debtor (in Austria regulated by the Ordinance of the Federal Minister for Economic Affairs on the Maximum Rates of Remuneration Due to Collection Institutes, Federal Law Gazette No. 141/1996, as well as Paragraf 1333 para. 2 ABGB and Paragraf 458 UGB).
Collection Assignment (Inkassozession): Transfer of the debt collection to a collection agency, whereby the claim remains the property of the creditor but is managed by the collection agency in a fiduciary capacity.
Insolvency Representation (Insolvenzvertretung): Legal representation and support for a creditor in the filing and enforcement of claims within insolvency proceedings.
K
Reimbursement of Costs (Kostenersatz): Reimbursement of costs incurred in connection with the performance of debt collection services, to be borne by either the debtor or the creditor.
Lawsuit (Klage): Legal proceeding initiated to judicially achieve the fulfillment of a claim by the debtor.
Current Account (Kontokorrent): An accounting system in which mutual claims and liabilities are continuously offset against each other.
L
Liquidity (Liquidität): Financial flexibility of a company to meet short-term liabilities.
Liquidity Management (Liquiditätsmanagement): Strategic planning and control of a company's cash flows to ensure solvency.
M
Payment Reminder (Mahnung): Under Austrian law, there is generally no obligation to send a payment reminder to place a debtor in default. The debtor automatically enters default upon the due date and non-performance, unless a reminder was contractually agreed upon or the law specifically requires one. There are no specific formal requirements for internal company reminders, such as sending reminders by registered mail.
Under Sec. 918 of the Austrian Civil Code (ABGB), the debtor enters default without a reminder if the claim has become due and they fail to perform. A reminder is therefore generally not required. However, contracting parties can agree on a reminder as a prerequisite for default. A reminder is also necessary if the due date of the invoice is not determined or determinable by law or agreement. In these cases, a reminder is required to establish default. Specific legal provisions, such as the Consumer Protection Act (KSchG), the Consumer Credit Act (VKrG), or the Distance and Off-Premises Transactions Act (FAGG), may contain deviating regulations that mandate a reminder. If default occurs without a reminder, the creditor may demand default interest and, if applicable, compensation for default costs pursuant to Paragraf 1333 ABGB.
Judicial Dunning Procedure (Mahnverfahren): A simplified judicial procedure under Sec. 244 et seq. of the Code of Civil Procedure (ZPO) for the rapid and cost-effective enforcement of undisputed monetary claims up to an amount of 75,000 euros.
Process: For monetary claims up to 75,000 euros, the court issues a conditional order for payment based on a dunning action, without a hearing and without examining the defendant. It is not verified whether the plaintiff actually has a valid claim for payment against the defendant.
Order for Payment: The order for payment issued by the court based on a dunning action bears the inscription "conditional order for payment" (bedingter Zahlungsbefehl). The defendant is instructed to pay the claim including interest within 14 days or to file an objection within four weeks.
Consequences of an Objection: The order for payment is only set aside if an objection is filed. If an objection is filed in due time, the order for payment becomes void, and the court invites the parties to an oral hearing. If no objection is filed, the order for payment becomes legally binding and can be enforced through compulsory execution, even if the claim is not rightfully valid.
Decision on Costs: If only the decision on costs is to be challenged, an appeal (Rekurs) must be filed against it.
Conclusion of the Procedure: If the defendant complies with the demand and pays the amount plus costs within the deadline, the procedure is concluded.
Dunning Action (Mahnklage): A judicial lawsuit to enforce an outstanding claim. For an amount in dispute (gross claim amount) up to 5,000 euros, the plaintiff can file the dunning action themselves at the competent District Court. For an amount in dispute exceeding 5,000 euros, legal representation by a lawyer is mandatory, meaning the dunning action can only be filed with the assistance of an attorney.
O
Order-to-Cash Process: Business process that covers all steps from receiving an order through invoicing to the final payment.
OCR (Optical Character Recognition): Technology for automated text recognition and processing, e.g., from scanned invoices and documents.
P
Attachment (Pfändung): A compulsory enforcement measure in which the court seizes property belonging to the debtor in order to settle outstanding claims.
Litigation Costs (Prozesskosten): Judicial and out-of-court costs incurred within the framework of a debt collection proceeding.
R
Installment Agreement (Ratenzahlungsvereinbarung): refers to a contractual agreement between the creditor and the debtor that allows the debtor to settle a due monetary claim in several partial amounts (installments).
Purpose:
Facilitates payment for the debtor and enables the creditor to receive a step-by-step settlement of the claim.
Components:
Total debt: Total amount of the claim (including principal claim, interest, collection costs).
Installment amount: Determination of the individual installment amounts.
Payment intervals: Time intervals at which the installments are to be paid (e.g., monthly).
Duration: Total duration of the installment payments.
Default interest: Agreement on any default interest incurred in the event of late payment.
Due date of installments: Defined dates for the installment payments.
Acceleration clause (Terminsverlust): Agreement that the entire remaining balance becomes due immediately if the debtor defaults on one installment.
Legal Effect:
The installment agreement changes the original payment claim in favor of several partial payments.
Advantages for the Creditor:
Regular incoming payments, reduction of the risk of the debtor's insolvency.
Stabilization of the relationship between creditor and debtor.
Advantages for the Debtor:
Simplified debt settlement without immediate high financial burden.
Reduction of financial pressure by repaying the debt over a longer period.
Example: A debtor owes a creditor 5,000 euros. Both agree that the debtor will pay the amount in monthly installments of 500 euros over ten months. The first installment is due on the 1st of the next month. Default interest may apply in the case of late payment. If the debtor falls behind on one installment, the entire remaining balance becomes due immediately (acceleration clause).
Lawyer (Rechtsanwalt): Legal representative who can take legal measures for debt enforcement on behalf of a creditor.
Lawyers' Tariff Act (Rechtsanwaltstarifgesetz): The Lawyers' Tariff Act (RATG) regulates the remuneration for legal services in Austria and is a central instrument for cost calculation and cost control in debt management. In the case of voluntary or mandatory involvement of lawyers in debt collection processes, the RATG guarantees transparency and traceability of the costs incurred.
Remaining Term (Restlaufzeit): The period until the complete fulfillment of a claim or a contract.
REST API (Representational State Transfer Application Programming Interface): A programming interface that facilitates structured data transfer and the integration of software components.
S
SaaS (Software as a Service): Software as a Service (SaaS) is based on the principle that software and IT infrastructure are operated by an external IT service provider and used by the customer as a service. It is a form of cloud computing in which a software application, along with all its underlying IT infrastructure, is made available to users via a web browser. SaaS solutions are mostly based on subscription models for providing cloud software. Unlike a permanent license, in this software delivery model, each account is linked to a subscription that grants SaaS access for a specific period-usually on an annual or monthly basis. The advantages of a SaaS solution consist, on the one hand, of the clearly calculable cost model and, on the other hand, the fact that the SaaS provider simultaneously takes care of the operation and maintenance of the software. Additionally, no local installation of the software is necessary.
Single-Sign-On (SSO): An authentication process that allows access to multiple systems and applications with a single login.
Debtor (Schuldner): A person or company that owes a performance or monetary payment to a creditor.
Amount in Dispute (Streitwert): refers to the monetary value underlying the subject of a legal dispute. It serves to determine court jurisdiction and is decisive for calculating court fees according to the Austrian Court Fees Act (GGG) and legal fees according to the Lawyers' Tariff Act (RATG). In debt management, the amount in dispute is the amount of the principal claim (the gross invoice/claim amount). When determining the amount in dispute, interest, collection costs, and other costs are disregarded. These cost elements therefore do not increase the amount in dispute.
Subscription Fee: Regularly recurring fees for using a subscription model, which may vary depending on the model.
T
Acceleration Clause (Terminsverlust): see Installment Agreement
Titled Claim (Titulierte Forderung): A claim that has been legally established and is enforceable based on a court judgment, order, or a writ of execution.
U
Transmission Body (Übermittlungsstelle): An institution that acts as an intermediary between courts and other public authorities for the electronic filing of documents (e.g., MANZ'sche Verlags- und Universitätsbuchhandlung).
V
Statute of Limitations (Verjährung): A legal term describing the period of time after which a claim can no longer be enforced in court.
Default Interest (Verzugszinsen): Interest that a debtor must pay in addition to the principal claim in the event of late payment of a debt.
Statutory Default Interest: Interest prescribed by law that a debtor must pay in addition to the principal claim in the event of late payment. In Austria, these currently amount to 4% per year for transactions between businesses and consumers (B2C), and for transactions between businesses (B2B), they are currently 9.2 percentage points above the base interest rate published by the Austrian National Bank.
Contractual Default Interest: Interest individually agreed upon within a contract that a debtor must pay in addition to the principal claim in the event of late payment. Contractual default interest is often higher than statutory default interest and must be explicitly specified in the contract (or in the effectively agreed General Terms and Conditions).
Full Recoverability (Volle Werthaltigkeit): A term describing the complete and timely fulfillment of a claim without any deductions or losses.
Enforcement Title (Vollstreckungstitel): In the field of debt management, a judicial order for payment that has been declared enforceable due to the defendant's failure to comply with payment or objection deadlines.
Z
Assignment (Zession): The transfer of a claim. This usually requires a contract between the holder (assignor/Zedent) and the acquirer (assignee/Zessionar) of the claim.
Compulsory Enforcement (Zwangsvollstreckung): see Execution