Debt collection glossary: terms explained.

Acceleration clause (Terminsverlust)

An acceleration clause means that the entire outstanding balance falls due immediately if the debtor defaults on an agreed instalment. The clause is part of most instalment agreements.

Action for payment (Mahnklage)

An action for payment is the court action used to enforce an unpaid claim. Up to an amount in dispute of 5,000 euros the claimant can file it themselves at the competent district court. Above 5,000 euros, representation by a lawyer is mandatory.

Amount in dispute

The amount in dispute is the monetary value underlying the subject of a legal dispute. It determines which court has jurisdiction and is decisive for court fees and lawyers' fees. When collecting unpaid claims the amount in dispute is the amount of the principal claim; interest and debt collection costs are disregarded and do not increase it.

Application for enforcement

An application for enforcement is the application to the court to carry out an enforcement measure, for example against claims, movable property or real estate. Applications for enforcement do not require a lawyer, regardless of the amount claimed.

Assignment (Zession)

An assignment is the transfer of a claim to a new creditor. This usually requires a contract between the previous holder (assignor) and the acquirer (assignee).

Attachment (Pfändung)

Attachment is an enforcement measure in which the debtor's assets are seized by the court in order to settle unpaid claims. Bank balances, income and movable property can be attached, among other things.

B2B (business-to-business)

B2B describes business relationships between two companies, as opposed to business between companies and end consumers (B2C). The distinction matters when collecting unpaid invoices, because different rules on default interest and consumer protection apply depending on the constellation. For small and medium-sized businesses, the bulk handover is described under debt collection for SMEs.

Case creation

Case creation is the opening of a debt collection case together with the recording of all relevant data and documents. This includes the invoice, the amount of the claim, the due date and the debtor's details. At incaseof.law this happens online, after which the institute takes over the collection. The starting point is submitting a claim.

Claim

A claim is the creditor's legal entitlement against the debtor to performance, usually in the form of a payment of money. It arises from a contract or from statute and is enforceable from the date it falls due.

Collection assignment (Inkassozession)

A collection assignment is the transfer of the collection of a claim to a debt collection agency, whereby the claim remains the property of the creditor and is administered on a fiduciary basis. The creditor does not sell the claim, it is only collected on their behalf.

Collection letter

A collection letter is a written payment request to the debtor that sets out the unpaid claim in detail. It names the principal claim, default interest and the costs incurred and sets a specific payment deadline.

Compulsory enforcement

Compulsory enforcement is the enforced realisation of an enforceable claim with state assistance; in Austria it is referred to as Exekution. It applies when a debtor does not pay despite a final title.

Conditional payment order (bedingter Zahlungsbefehl)

The conditional payment order is the court payment order issued as the result of an action for payment. It orders the defendant to pay the claim plus interest within 14 days or to file an objection within four weeks. Only a timely objection sets it aside.

Contractual default interest

Contractual default interest is interest agreed individually in a contract that is payable in addition to the principal claim when payment is late. It is often higher than statutory default interest and must be expressly laid down in the contract or in validly agreed general terms and conditions.

Court fees

Court fees are the fees charged for the use of court services, governed in Austria by the Court Fees Act (GGG). Their amount depends on the amount in dispute, that is, on the size of the principal claim.

Credit check

A credit check is the assessment of a debtor's creditworthiness, usually by obtaining business information. Among other things it serves to estimate the litigation cost risk, that is, whether taking a case to court makes economic sense.

Creditor

The creditor is the person or company that holds a claim against a debtor and can demand that it be fulfilled. In debt collection the creditor is the client: they hand over the unpaid claim for collection, and the entitlement remains theirs. Companies can hand their claim directly to incaseof.law.

Current account (Kontokorrent)

A current account is a settlement system in which mutual claims and liabilities are continuously set off against each other. Only the remaining balance is owed on the settlement date.

Debt collection

Debt collection is the service of collecting unpaid claims on behalf of a creditor. Collection first takes place out of court through payment requests and, where necessary, through the courts. In Austria debt collection is a licensed trade; incaseof.law is licensed as a debt collection institute in Austria and Germany. The process is shown in how debt collection works.

Debt collection agency

A debt collection agency is a company specialising in the collection of overdue claims. It is usually instructed once in-house dunning has not produced the desired result. Debt collection institutes such as incaseof.law only take on uncontested claims for collection.

Debt collection costs

Debt collection costs are the fees incurred for the use of debt collection services, which in many cases are borne by the defaulting debtor. In Austria the maximum rates are set by regulation. What that means in practice is set out on the page on debt collection costs.

Debtor

The debtor is the person or company that owes a creditor a performance or a payment of money. If payment is not made after the due date, the debtor is in default. If you have received a letter from incaseof.law yourself, the payment and contact routes are listed under information for debtors.

Default interest

Default interest is interest that a debtor has to pay in addition to the principal claim when payment is late. In Austria, statutory default interest between businesses and consumers is 4 % per year. Between businesses it is 9.2 percentage points above the base rate published by the Austrian National Bank.

Document AI

Document AI refers to artificial intelligence used to automatically recognise and process document content such as invoices and contracts. When collecting unpaid claims it reads out invoice data and assigns it to a case, without anyone having to type it in.

Doubtful debt collection

Doubtful debt collection is the collection of claims classified as doubtful or at risk because they are difficult or impossible to realise. Often these are older claims that have already been written down in the accounts.

Due date

The due date is the point in time at which a claim becomes legally enforceable and the debtor is obliged to perform. It can be set in the contract, for example with the wording payable within 30 days of the invoice date. If nothing is agreed, the statutory rule of the ABGB applies. From the due date the creditor may demand performance; if the debtor then fails to pay, default occurs.

• Example: a customer receives the invoice on 1 January with a payment term of 30 days. The claim falls due on 31 January.
• From that point the creditor can demand payment and take further steps if payment is not made.
• Debt collection institutes only take on claims that are due and uncontested.

Electronic legal communication (ERV)

Electronic legal communication (ERV) is the system through which submissions such as actions, applications, pleadings, appeals and claim filings, together with their attachments, are transmitted electronically and securely to Austrian courts and public prosecutors' offices and received from them.

Enforceable claim

An enforceable claim is a claim that has been finally established and made enforceable by a court judgment, a court order or an enforceable payment order. Enforcement is only possible once such a title exists.

Enforcement (Exekution)

Enforcement is the legal realisation of an enforceable claim using state coercive power, for example by attaching bank accounts or income. It requires an enforcement title and is therefore the final stage when a debtor does not pay despite a final decision. The stages before it are described in the debt collection process.

Enforcement title

An enforcement title is a court payment order that has been declared enforceable because the deadlines for payment or objection were not met. It is the precondition for a claim to be enforced by way of enforcement proceedings.

European order for payment procedure

The European order for payment procedure is a simplified court procedure for the cross-border enforcement of uncontested monetary claims within the EU member states, with the exception of Denmark. In Austria, the Vienna District Court for Commercial Matters has exclusive jurisdiction.

Extrajudicial debt collection

Extrajudicial debt collection is the collection of unpaid claims without involving a court, usually through payment requests and reminders sent to the debtor. Most cases are settled this way because it is faster and cheaper than court proceedings. The page on how debt collection works shows the process at incaseof.law.

Full recoverability

Full recoverability describes the complete and timely fulfilment of a claim without deductions. The creditor receives the entire amount owed.

General terms and conditions (AGB)

General terms and conditions are pre-formulated contractual terms that one contracting party presents to the other when a contract is concluded. They are particularly relevant for unpaid invoices, because payment terms, due dates and contractual default interest can be validly agreed there.

Insolvency representation

Insolvency representation is the legal representation and support of a creditor when filing and pursuing claims in insolvency proceedings. It ensures that claims are filed within the deadline.

Instalment agreement

An instalment agreement is the contractual agreement between creditor and debtor to settle a monetary claim that has fallen due in several partial amounts. It makes payment easier for the debtor and secures regular receipts for the creditor instead of a default.

• Total debt: the total amount of the claim including principal claim, interest and costs.
• Instalment amount, payment intervals and term: the size of the partial amounts, the intervals and the overall duration.
• Acceleration clause: if the debtor defaults on one instalment, the entire remaining amount falls due immediately.
• Example: 5,000 euros are settled in ten monthly instalments of 500 euros, with the first instalment due on the first day of the following month.

Judicial debt recovery

Judicial debt recovery is the route by which a creditor can enforce an uncontested claim in court, typically in the form of an action for payment. It is used when extrajudicial collection has not resulted in payment.

Lawyer

A lawyer is a legal representative who can take legal steps to enforce a claim on behalf of a creditor. In court proceedings, representation by a lawyer is mandatory from an amount in dispute of 5,000 euros. Law firms that hand over their own fee notes or client claims will find the process under debt collection for law firms.

Lawyers' Tariff Act (RATG)

The Lawyers' Tariff Act (RATG) governs the remuneration of legal services in Austria and is a central instrument for calculating and controlling costs. Where lawyers are involved in proceedings to enforce a claim, the RATG makes the resulting costs transparent and comprehensible.

Legal action

Legal action is the court procedure by which fulfilment of a claim is to be obtained. It comes into consideration when the debtor contests the claim or fails to pay despite a payment request.

Liability

Liability is the legal responsibility for damage or losses that may arise in connection with the performance of debt collection services. It governs who has to answer for errors in the collection process.

Limitation period

The limitation period is the period after which a claim can no longer be enforced in court. The claim does not lapse, but the debtor can refuse to pay. The earlier an unpaid invoice is handed over, the lower the risk that it becomes time-barred.

Liquidity

Liquidity is a company's financial ability to meet short-term liabilities on time. Unpaid claims tie up capital and therefore directly reduce liquidity.

Liquidity management

Liquidity management is the strategic planning and control of a company's cash flows to safeguard its ability to pay. An orderly approach to unpaid invoices is one of the most effective levers here, as receivables management for companies shows.

Litigation costs

Litigation costs are the court and out-of-court costs incurred in proceedings to enforce a claim. They include court fees and the costs of representation. The costs that arise in extrajudicial collection are set out under debt collection costs.

OCR (optical character recognition)

OCR is a technology for the automated recognition and processing of text, for example from scanned invoices and documents. It converts image files into machine-readable text and is the basis for creating a case automatically.

Order for payment procedure (Mahnverfahren)

The order for payment procedure is a simplified court procedure under the Austrian Code of Civil Procedure for the fast and low-cost enforcement of uncontested monetary claims up to 75,000 euros. On the basis of an action for payment, the court issues a conditional payment order without a hearing and without questioning the defendant.

• Payment order: the defendant is required to pay within 14 days or to file an objection within four weeks.
• Objection: only a timely objection sets the payment order aside; the court then summons the parties to an oral hearing.
• Without an objection the payment order becomes final and can be enforced by way of compulsory enforcement.
• Costs decision: if only the costs decision is to be challenged, an appeal against that decision must be filed.
• Conclusion: if the defendant pays the amount plus costs on time, the proceedings are at an end.

Order-to-cash process

The order-to-cash process covers all steps from taking an order through invoicing to final payment. Dealing with unpaid invoices is its last section and decides whether an order actually turns into money. Companies that want to hand over this last section will find the options under outsource receivables management.

Payment request

A payment request is the written request to the debtor to settle a claim that has fallen due within a set deadline. It is the central instrument of extrajudicial debt collection and names the principal claim, default interest and the costs incurred. If it goes unanswered, the next steps are described under customer not paying.

Place of jurisdiction

The place of jurisdiction is the location at which court proceedings are heard. It can be agreed contractually or follow the statutory rules; in business dealings it is often laid down in the general terms and conditions.

Processing on behalf of a controller

Processing on behalf of a controller means the collection, processing or use of personal data by a service provider on behalf of a controller. The processor acts solely on instructions and does not use the data for its own purposes. The basis is a written data processing agreement under the General Data Protection Regulation.

• Bound by instructions: the processor acts solely on the instructions of the controller.
• No own purposes: the data is not used for the service provider's own purposes.
• Written form: a written data processing agreement is required.
• Responsibility: responsibility for the data processing remains with the client.

Reimbursement of costs

Reimbursement of costs is the refund of those costs that have arisen in connection with the performance of debt collection services. In the case of justified default it is generally borne by the defaulting debtor. How that affects the payout is shown in debt collection costs in detail.

Remaining term

The remaining term is the period until a claim or a contract is fulfilled in full. In the case of payment by instalments it describes the time left until the final instalment.

Reminder

A reminder is a request to the debtor to make a payment that is due. Under Austrian law it is generally not necessary in order to trigger default: the debtor is automatically in default once the claim is due and unpaid. The position is different where a reminder has been agreed contractually or is required by statute. The order of reminder, formal reminder and handover is shown under unpaid invoice.

• There are no formal requirements for in-house reminders, such as sending them by registered post.
• A reminder is necessary if the due date can be determined neither by statute nor by agreement.
• Different rules may apply under the Consumer Protection Act, the Consumer Credit Act and the Distance and Off-Premises Contracts Act.
• Once default occurs, the creditor can claim default interest and reimbursement of the costs of default.

REST API

A REST API (representational state transfer application programming interface) is a programming interface that makes structured data transfer and the integration of software components easier. It hands unpaid invoices over automatically from the accounting system, without manual entry. How an existing system connects to incaseof.law is described under the debt collection API.

SaaS (software as a service)

SaaS describes a model in which software and IT infrastructure run at an external service provider and are used by the customer as a service through a web browser. Billing is usually by subscription per period. There is no local installation; operation and maintenance are handled by the provider.

Settlement of a claim

Settlement of a claim is the payment of the amount owed by the debtor, whereby the claim is deemed fulfilled. A case is only closed once it has been settled in full, including interest and any costs incurred.

Single sign-on (SSO)

Single sign-on (SSO) is an authentication method that allows users to log in once and then access several systems and applications. In companies it reduces administrative effort and increases security.

Subscription fee

A subscription fee is the recurring fee for the use of a subscription model. Depending on the model it is charged monthly or annually.

Suspension of the limitation period (Ablaufhemmung)

Suspension of the limitation period is the temporary interruption of the limitation period for as long as certain statutory or contractual grounds apply. The limitation period does not continue to run during this time, so a claim remains enforceable despite the passage of time.

Transmission agency

A transmission agency is the institution that acts as an intermediary between courts and other public bodies for the electronic filing of documents. It is part of the infrastructure of electronic legal communication.

Write-off

A write-off is the accounting value adjustment of a claim that is unlikely to be recoverable. It records the probable loss in the accounts. The claim against the debtor does not lapse as a result: a written-off claim remains enforceable as long as it is not time-barred.