What to do if your company can't collect payments? A complete guide to debt collection, payment orders, and forged attachments for businesses.

Key Points

If a company cannot collect payments for goods, it must first determine the evidence of the debt and the necessity of preservation measures.

When a company is owed money for goods, projects, services, or purchases, it should not rely solely on verbal demands. The company should first compile contracts, orders, quotations, statements of account, invoices, and shipping or acceptance records before determining whether it is appropriate to send a depositary letter, request a payment order, initiate civil litigation, or assess the suitability of a provisional attachment if the other party faces a high risk of asset stripping.

• Suitable for companies, managers, and financial officers in Taipei, New Taipei, Taoyuan, Hsinchu, and Keelung areas who have corporate debt recovery needs.
• Key keywords include: uncollectible company payments, debt collection, payment orders, false seizures, and lawyers handling payment disputes.
• If the other party raises objections based on quality defects, set-off, or contractual interpretations, evidence is usually gathered from business documents and transaction processes.

If a company is unable to collect payments, the first step is not to keep chasing after them, but to determine the legal avenues for action.

When a company encounters a customer who is overdue on payments for goods, services, projects, or final payments, the most common response is for the sales department to continue chasing the customer, the accountant to continue sending account statements, and the boss to personally call. These actions are sometimes effective, but if the other party starts to delay, avoid meeting, change contact channels, refuse to accept mail, or keeps saying "payment next week" even though operations are normal, the company should change the case from a regular collection process to legal collection.

The core of debt collection for businesses is not just about making tough statements, but about letting the debtor know that the company has three things in place: evidence of the claim, preparation for court proceedings, and a strategy for asset preservation. If these three things are not properly organized, even if a lawsuit is eventually filed, the recovery time may be delayed due to insufficient evidence, statute of limitations, the debtor's departure from the company, or objections to the payment order.

Before pursuing debt collection, businesses should first confirm whether the debt is legally valid.

Contracts, orders, quotations, and reconciliation records need to be linked together first.

When a company wants to recover payment for goods or services, the first issue is whether it can prove that a transaction relationship existed between the two parties, and how the amount should be calculated. A written contract is of course the best, but in practice, many business transactions rely on quotations, orders, emails, LINE conversations, shipping documents, acceptance slips, invoices, payment requests, account statements, and remittance records to piece together the complete facts.

In cases involving payment for goods, Article 367 of the Civil Code stipulates that the buyer has an obligation to the seller to pay the agreed price and take delivery of the goods. In other words, if the company has shipped the goods as agreed, but the buyer fails to pay after receiving the goods, this usually raises the issue of a claim for payment.

For engineering, design, consulting, system development, processing, or other contracted services, Article 490 of the Civil Code stipulates that a contract for work is an agreement in which one party completes certain tasks and the other party pays remuneration. Article 505 of the Civil Code further stipulates that remuneration should, in principle, be paid upon delivery of the work; if delivery is not required, it should be paid upon completion of the work. The focus of these cases usually lies in whether the work was completed, whether the deliverables were delivered, whether the other party accepted the work, or whether any specific defects were raised.

The fact that the other party says there are quality issues does not mean that payment can be withheld entirely.

Many debtors use reasons such as "quality issues," "boss dissatisfaction," or "the customer hasn't paid me yet" to refuse payment. Companies shouldn't just reply with "you owe money," but rather break down the points of contention.

If the other party never raises specific defects within a reasonable timeframe, or if they have already used the goods, resold the products, implemented the system, or received the services, but only vaguely claim quality issues after demanding payment, the court will usually require the debtor to specify the details of the defects, the time of discovery, the notification process, and the calculation of damages. The creditor company should then compile records of delivery, acceptance, use, reconciliation, and payment collection to move the case from verbal disputes to evidence-based judgment.

The biggest fear in debt collection is exceeding the statute of limitations, especially for payments to merchants for goods and services.

Company accounts receivable cannot be left unpaid indefinitely. According to Article 125 of the Civil Code, a general claim is extinguished in principle if it is not exercised within 15 years; however, Article 127 of the Civil Code sets a short limitation period of 2 years for many common commercial claims, including the remuneration and advances of technicians and contractors, as well as the consideration for goods and products supplied by merchants, manufacturers, and craftsmen.

This means that cases involving payments for goods, processing fees, or partial engineering or contracting fees cannot be judged solely by the general 15-year statute of limitations. Many companies believe that "the other party has always acknowledged the debt, so it doesn't matter," but if they do not retain clear evidence of acknowledgment of the debt, such as account reconciliation confirmations, installment commitments, payment agreements, or electronic messages acknowledging the amount, they may face statute of limitations defenses in the future.

A depositary letter or a lawyer's letter may constitute a request as defined in Article 129 of the Civil Code. However, Article 130 of the Civil Code also stipulates that if the statute of limitations is interrupted by a request, it shall be deemed uninterrupted if no lawsuit is filed within six months after the request. Therefore, a depositary letter is not a tool for permanently protecting debts. If a company discovers that a debt has been outstanding for nearly two years, it should immediately assess payment orders, mediation, litigation, or other procedures that can stably preserve its rights.

Which types of corporate debt cases are suitable for payment orders?

The advantage of a payment order is its speed, but this is contingent on the debt being clear.

Article 508 of the Civil Procedure Law stipulates that if a creditor's request is for payment of a certain amount of money, other substitutes, or negotiable securities, the creditor may petition the court to issue a payment order through summary proceedings. In cases involving the collection of outstanding corporate debts, monetary claims such as payments for goods, service fees, outstanding project payments, rent, loans, and penalties may all be subject to the assessment and application of payment orders.

The advantage of a payment order is that it avoids the need to immediately engage in a full legal battle. According to Article 511 of the Code of Civil Procedure, when a creditor files a claim, they must specify the parties involved, the subject matter and quantity of the claim, and the facts underlying the claim; the creditor's claim must also be clearly stated. In practice, companies typically need to prepare contracts, orders, invoices, statements of account, shipping or delivery records, collection records, and documents acknowledging the debt owed by the other party.

If the other party objects within 20 days, the payment order will proceed to litigation or mediation.

A payment order does not automatically guarantee payment upon receipt. Article 516 of the Civil Procedure Law stipulates that the debtor may raise an objection without cause within 20 days of the service of the payment order. According to Article 519 of the same law, if the debtor raises a legitimate objection, the payment order becomes invalid within the scope of the objection, and the creditor's application will be considered a lawsuit or a request for mediation.

Therefore, payment orders are suitable for cases where the amount of the debt is clear, the evidence is complete, the other party may make payment based on court documents, or the company is willing to continue litigation after the other party objects. If the company knows that the other party will definitely dispute the quality, amount, progress of performance, or set-off defense, it should first assess whether to file a lawsuit directly to avoid going through a roundabout process and ending up back in litigation.

If the other party does not object, the payment order can serve as the legal basis for execution.

If the debtor fails to raise a legal objection within the statutory period, Article 521 of the Civil Procedure Law stipulates that a payment order may be used as the basis for enforcement. In this case, the creditor company can apply to the court for compulsory enforcement of the debtor's deposits, salaries, accounts receivable, movable property, immovable property, or other assets, based on the payment order and a certificate of confirmation.

However, companies should be aware that if a payment order cannot be legally served, for example, if it cannot be served on the debtor within three months, the payment order will become invalid under Article 515 of the Code of Civil Procedure. For cases where the debtor's address is unknown, the company has ceased operations, the responsible person is avoiding contact, or service needs to be effected from abroad, the risks of service and alternative procedures should be assessed first.

If it is discovered that the other party may be transferring assets, a provisional seizure should be considered.

A sham seizure is to prevent a court of law from being won but not receiving the money.

What companies fear most is winning a lawsuit only to find that the debtor has no assets left. Article 522 of the Civil Procedure Law stipulates that a creditor may apply for provisional attachment to preserve and enforce a monetary claim or a claim that can be converted into a monetary claim. Article 523 of the Civil Procedure Law further stipulates that provisional attachment shall not be granted unless there is a risk that enforcement will be impossible or difficult in the future; if enforcement is to be carried out abroad, it shall be deemed that there is a risk that enforcement will be extremely difficult in the future.

Simply put, a provisional attachment is not a shortcut to debt collection, but rather a tool for asset preservation. When a debtor transfers assets, ceases business operations, disposes of a large amount of property abnormally, refuses to engage in business, experiences a rapid deterioration in its financial situation, has limited assets in Taiwan as a foreign company, or owes a debt that significantly exceeds its ability to pay, the company should promptly assess the need for a provisional attachment.

Simply owing money and not paying it back is usually not enough.

Article 526 of the Civil Procedure Law stipulates that the request for provisional attachment and the reasons for provisional attachment must be explained; if the explanation is insufficient but the creditor is willing to provide security, or if the court deems it appropriate, the court may order the provisional attachment after the security is provided. In practice, the court will not automatically grant provisional attachment simply because the other party owes money; the company must explain why enforcement may not be possible or will be difficult in the future.

Documents that can be prepared include unusual behavior after the other party stops making payments, changes in company registration, signs of business closure, information on asset transfers, bounced checks, claims from other creditors, explicit refusal to pay from the other party, and signs of overseas fund transfers or cessation of operations in Taiwan. This is why lawyers should intervene early in major debt cases, as the success or failure of a preliminary attachment often depends on the preparation of evidence before the application is filed.

After obtaining a false seizure order, it must be executed promptly.

A provisional attachment order is not the final step. Article 132 of the Enforcement Act stipulates that the execution of a provisional attachment or provisional injunction shall be carried out simultaneously with or before the service of the order; if more than 30 days have passed since the creditor received the provisional attachment or provisional injunction, he/she may not apply for enforcement. In other words, if a company does not immediately arrange for deposit, application for enforcement, and seizure procedures after obtaining a provisional attachment order, it may miss the opportunity for preservation.

Practical Process of Debt Collection for Enterprises

Phase 1: Organizing Evidence and Amounts

The company should first confirm the debtor's full name, unified registration number, responsible person, company address, contract documents, transaction records, invoices, proof of shipment or delivery, acceptance records, reconciliation information, partial payment records, collection records, and calculation of late payment interest. If the two parties have agreed on interest or penalties, the company should also check whether the agreement is clear, whether the amount is excessive, and whether it may be reduced by the court.

Phase Two: Issuing a formal demand notice or lawyer's letter

The purpose of a formal demand is not merely to collect payment, but to fix the debt amount, payment deadline, liability for delay, and subsequent legal proceedings. For clients who still have potential for cooperation, installment payment agreements, promissory notes, guarantors, collateral, or notarized enforcement clauses can be designed. For debtors who are clearly delaying payments or at risk of asset stripping, the demand should avoid giving them too much time to transfer assets, and a preliminary attachment assessment should be conducted simultaneously.

Phase Three: Choosing a payment order, mediation, litigation, or provisional attachment

If the claim is clear, the amount is explicit, and the opposing party's defense is weak, a payment order can be considered. If the disputed aspects of the transaction are complex and the opposing party is bound to object, civil litigation is usually necessary. If the opposing party still has room for negotiation, mediation can be combined with security clauses or installment payments. If there are concerns about asset stripping, a preliminary attachment should be assessed first, and if necessary, an application should be filed before litigation.

Fourth stage: Applying for enforcement after obtaining the legal name for enforcement.

A judgment, a settlement agreement, a record of reconciliation, a payment order, a notarized document, or other enforceable documents can all serve as the basis for enforcement. According to Article 4 of the Enforcement Law, enforcement must be carried out in the name of enforcement. After obtaining the enforcement title, the company should promptly ascertain the debtor's enforceable assets, including bank deposits, accounts receivable from third parties, machinery and equipment, vehicles, real estate, shares, or other property rights.

How Fidelity Law Firm Assists Companies in Managing Debt and Accounts Receivable Risks

Corporate debt collection is not just about handling individual cases; it also involves corporate risk control, contract design, payment terms, credit management, and litigation strategies. Fidelity Law Firm can assist companies in establishing an enforceable collection strategy, from evidence review, lawyer's letters, payment orders, preliminary injunctions, civil litigation, enforcement proceedings to settlement agreement design.

If your company is facing issues such as unpaid customer debts, uncollectible payments for goods, or delayed service fees or project final payments, it is recommended that you have a lawyer review the transaction details, statute of limitations risks, and the debtor's financial situation as soon as possible. The earlier you intervene, the greater the chance of preserving assets before the debtor absconds, and the less time your company will waste on ineffective debt collection.

VI. FAQs in the main text

Frequently Asked Questions

If a company cannot collect payment for goods, can it directly sue the other party?

Yes. As long as the company can provide contracts, orders, shipping records, invoices, statements, collection records, or other evidence to prove the transaction between the two parties, that the company has fulfilled its delivery obligations, and that the other party has not yet paid, it can assess and apply for a payment order, mediation, or file a civil lawsuit. If the other party is at risk of asset stripping, a provisional attachment should be assessed simultaneously.

Which should I choose: a payment order or a civil lawsuit?

If the amount owed is clear, the evidence is simple, and the other party is unlikely to raise objections, a payment order is usually issued quickly. However, if the other party is certain to claim defects, set-offs, non-acceptance, or errors in the amount, the payment order will still be subject to litigation or mediation after being challenged. In this case, filing a lawsuit directly may be more efficient.

If the other party ignores the payment order, how long can it be enforced?

After receiving a payment order, the debtor has 20 days to raise an objection. If the debtor does not raise a valid objection, the payment order can become the basis for enforcement, and the company, after obtaining a certificate of validity, can apply to the court for compulsory enforcement of the debtor's assets.

If a company only knows that the other party owes money, can it apply for a preliminary attachment?

Simply owing money and not paying it back is usually not enough. A provisional seizure needs to demonstrate the existence of the debt, as well as the risk that it may be impossible or difficult to enforce in the future. For example, the debtor may be suspected of leaving the business, ceasing operations, having abnormal transfers of assets, evading contact, having obviously insufficient assets, or the place of enforcement being abroad.

Are there any time limits for outstanding payments for goods or services?

Yes. Generally, the limitation period for claims is 15 years, but for payments made by merchants, manufacturers, and artisans for goods and products, as well as for contractors' remuneration, a shorter limitation period of 2 years may apply. Companies should confirm the nature of the debt, its due date, and whether there are any effective actions to interrupt the limitation period as early as possible.

Does a lawyer's letter guarantee that the debt will be recovered?

A lawyer's letter cannot guarantee payment, but it formally states the amount owed, the payment deadline, and the legal consequences. It can also help resolve disputes in subsequent payment orders, lawsuits, or preliminary attachment proceedings. If the other party clearly has no intention of paying or is at risk of asset liquidation, one should not stop at sending a lawyer's letter but immediately assess the court proceedings.