Advance invoice unpaid: What Swiss SMEs can do now

You've issued an advance invoice, the contract is agreed — but the money hasn't arrived. Now the question arises: Do you start work anyway? Send a reminder immediately? And what if the customer never pays? This article shows you exactly what to do in such a situation without legal risk or unnecessary damage to the relationship.

Why unpaid advance invoices are particularly tricky

An advance invoice protects you before you begin work. If it goes unpaid, you face a dilemma: start the project and risk finishing without compensation, or wait and lose the customer or fall behind schedule.

Unlike a final invoice, where at least the service has already been delivered, with an outstanding advance invoice you still hold all the cards — and should use them.

Step 1: Check payment terms and document everything clearly

Before you react, review the agreed payment terms. In Switzerland, the statutory deadline is 30 days from the invoice date (Art. 102 CO) unless otherwise specified. If you've set shorter terms — say 10 or 14 days — in your terms of business or offer, those apply.

Note down:

• Invoice date
• Agreed payment terms
• Actual due date
• Whether written order confirmation exists

Without documentation, it will be difficult to enforce claims later.

Step 2: Friendly payment reminder — but timely

One to two working days after the due date, you may send a payment reminder. This is not a formal demand in the legal sense, just a notice. Many payment delays result from simple oversight or internal approval processes on the customer's side.

Keep it factual:

"Our advance invoice no. [XXX] from [date] for CHF [amount] became due on [due date]. If payment is already on its way, please disregard this message."

Avoid accusations. The tone at this stage should keep the relationship intact.

Step 3: Formal demand with payment deadline

If the customer doesn't respond to the reminder, send a formal demand. Important: In Switzerland, you must place the debtor in default before further rights arise (Art. 102(1) CO). This happens through a written demand with a specific new deadline — typically 10 to 14 days.

Include:

• Invoice number and amount
• Original due date
• New payment deadline with specific date
• Hint at potential next steps (work stoppage, debt collection proceedings)

Send the demand by email and by registered letter if the sum is substantial. This gives you proof of delivery.

For a structured approach to dunning — from reminder through to debt collection — see the complete guide in Swiss dunning process — from reminder email to debt collection.

Step 4: Withhold performance — your legal right

As long as an advance invoice is outstanding, you are not obliged to perform the service. The right of retention (Art. 82 CO) allows you to withhold your performance until the customer pays.

Tell the customer in writing that you will only start or continue the project after payment arrives. Avoid emotional or abrupt language — stick to the facts:

"Under our agreement, performance begins after receipt of the advance payment. Since this is still outstanding, we cannot confirm project start at this time."

This is not a breach on your part — it's prudent risk management.

Step 5: Debt collection as a last resort

If the customer shows no reaction, debt collection via the debt enforcement office remains. In Switzerland, you can pursue a claim through the debt enforcement procedure (SchKG) without going to court first.

You'll need:

• Customer name and address
• Exact claim amount in CHF
• Legal basis (contract, invoice)

The payment order is served on the debtor. If they file an objection, you'll need a court — the process becomes more complex. For smaller amounts (up to CHF 2,000), simplified proceedings under the Civil Procedure Code apply.

Keep in mind: debt collection significantly damages the business relationship. Consider first whether a clarifying phone call or payment plan might be better.

VAT aspect: What about your tax liability?

If you're subject to VAT, you owe the tax at the time of invoice issuance — regardless of whether the customer has paid. This means you have a tax liability to the Federal Tax Administration even if the customer hasn't paid yet.

If you use the accrual method (invoice issued), you owe VAT immediately. Those using the cash method (payment received) only owe VAT when money actually arrives — often better for cash flow. Discuss with your accountant which method applies to you.

For the fundamentals of correct VAT accounting — including current rates of 8.1%, 3.8%, and 2.6% — read Swiss VAT basics 2026 — rates, duties and special rules.

When to adjust or reissue an advance invoice

Sometimes the project scope changes, or the customer requests a different payment structure. In such cases, it makes sense to cancel the outstanding advance invoice and issue a new one with adjusted terms — if both parties agree. Number the new invoice clearly and reference the cancelled predecessor.

For clean and complete invoicing — including QR-bill payment component — use SnapBill, the invoicing tool for Swiss SMEs and freelancers.

At a glance

Step	When	Action
Payment reminder	1–2 days after due date	Friendly email, not a formal demand
Formal demand	From 5–7 days after due date	Written, new deadline 10–14 days
Withhold performance	Immediately when advance outstanding	Art. 82 CO, communicate in writing
Debt collection	After unsuccessful demand	Via debt enforcement office, SchKG
Check VAT	In parallel	Clarify accounting method with accountant

An unpaid advance invoice is uncomfortable, but manageable — if you proceed systematically, document in writing, and know your rights.