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Collecting receivables: from reminder to write-off

Status date: 31 July 2026 · Examples are fictional scenarios, not real clients

Collection does not end with enforcement. The accounting file must also answer when a bad debt can reduce taxable profit and when VAT already paid on an uncollected invoice may be corrected.

Start with due date and limitation

Between businesses, the statutory payment period is generally up to 60 days, with the prescribed exceptional agreement up to 360 days. For a business paying a public-law person, the ordinary period is up to 30 days and the prescribed exception up to 60 days. Late payment also gives the creditor a fixed 40 EUR recovery-cost compensation without first sending a reminder.

A reminder does not interrupt limitation. Court action or another qualifying action before the competent body, and the debtor’s acknowledgement, can interrupt it, after which the period starts again. This is why a diary full of reminder emails is not a legal collection strategy.

Enforcement and collective proceedings

An invoice, extract from business books and other prescribed documents can be authentic documents for enforcement. A notary sends the proposed enforcement to the debtor, who has 15 days to object; an objection can move the dispute into litigation. If the debtor enters pre-insolvency or insolvency, the claim must be pursued within that collective proceeding rather than through an ordinary individual collection route.

Tax treatment of the unpaid balance

For profit tax, an impairment or write-off requires the statutory age and collection-effort conditions. One key time test is more than 60 days after maturity and non-payment by the fifteenth day before filing the tax return. Litigation, enforcement, insolvency filing or settlement may demonstrate prudent collection; impossibility or disproportionate collection cost has its own treatment.

VAT on a claim uncollected for more than one year may be corrected under the prescribed conditions and PDV-ispravak procedure. If the claim is later collected, the taxable amount must be increased again. The correction is therefore an alignment with collection, not permission to forget the debtor.

Prevention belongs in the contract

  • A notarised promissory note or blank promissory note can have the force of an enforceable instrument.
  • A seller of goods can reserve ownership until full payment.
  • A contractual penalty cannot be agreed for a monetary obligation; late-payment interest and the statutory recovery-cost amount serve that field.

A reminder sent before expiry

A supplier repeatedly emails a debtor but takes no qualifying legal action and obtains no acknowledgement. The reminders may help negotiation, but they do not interrupt limitation.

An undisputed invoice

The customer accepts delivery and never disputes the invoice. Enforcement on the authentic document may be proportionate, but the supplier first confirms address, maturity, evidence and whether the debtor is already in a collective proceeding.

VAT already paid

An invoice remains uncollected for more than one year. The business reviews the statutory correction conditions and files the prescribed VAT correction; if collection occurs later, it reverses the adjustment as required.

Frequently asked questions

Does a payment reminder interrupt limitation?

No. A creditor's reminder alone does not interrupt limitation. Interruption follows a qualifying debtor acknowledgement or legal action prescribed by law.

Can I claim anything besides interest when a business customer pays late?

The creditor may have the statutory fixed recovery-cost entitlement in addition to default interest, subject to the rules governing the transaction.

How much does enforcement through a notary cost?

Cost depends on the claim, tariff, objections and later procedure. Calculate the likely recovery route before adding another unrecoverable cost.

When may an unpaid invoice be written off for tax?

Accounting write-off and tax deductibility are different tests. The prescribed collection actions, limitation and debtor status determine the tax treatment.

Can I recover VAT on an invoice that was never paid?

The VAT Act allows correction under prescribed conditions, documentation and deadlines. Later collection requires the corresponding reversal.

May I agree a penalty for late payment?

A contractual penalty is generally not agreed for a monetary obligation itself. Default interest and the statutory recovery-cost rules are the usual legal instruments.

Can a time-barred receivable simply be deducted?

Not automatically. Accounting derecognition, tax deductibility and limitation are separate questions and require evidence of the applicable statutory conditions.

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Status date: 31 July 2026. This guide is general information, not tax or legal advice for a specific case. Croatian rules and annual amounts can change; the date above is part of the information.

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