B2B Debt Collection Manufacturing: Creditor Playbook

EUR 640KUnpaid invoices blocked by PPM chargebacks + tooling dispute

Art.38-39 CISGQuality dispute deadline — max 2 years from delivery

ROT clauseRetention of title — must be registered in debtor jurisdiction

B2B Debt Collection Manufacturing: Creditor Playbook

PPM chargebackQuality disputeParts-per-million penalty — often used to offset unpaid invoices

Art.39 CISG2yr deadlineQuality defect notification — late = buyer forfeits all rights

ROTRetention of titleMust be registered in debtor country + goods not incorporated

MahnverfahrenDE: 2–4 weeksAutomated payment order — undisputed invoices only

Call-off ordersB2B exposureEach shipment = separate invoice — treat undisputed separately

Manufacturing debt recovery

1

PPM chargebacks: separating legitimate from pretextual

Legitimate PPM chargeback requires: documented inspection report, batch identification, formal notification under CISG Art.39 within a reasonable time from discovery (max 2 years from delivery). An OEM that accepted 180,000 brackets, installed them on the production line, and raises a quality dispute 6 months later faces a strong CISG Art.39 challenge. Undocumented chargebacks with no inspection report are not enforceable set-off claims.

2

Retention of title: the lever requiring advance planning

ROT allows the seller to retain ownership until full payment. Enforceable if: (1) Contractually agreed in writing. (2) Registered in debtor jurisdiction (DE: Eigentumsvorbehalt in Lieferschein; FR: clause de réserve dans CGV; IT: Art.1523 cc). (3) Goods not incorporated into buyer’s product. For OEM supply where parts are installed on the production line: ROT inapplicable after incorporation. For unprocessed stock in buyer’s warehouse: highly effective.

3

Cross-border manufacturing recovery: step by step

Step 1: Document audit — CMR/delivery note, signed call-off, quality acceptance records. Step 2: CISG Art.39 analysis — quality dispute notified in time? Late = forfeited. Step 3: Separate undisputed invoices from disputed ones. Step 4: Place undisputed invoices via EOP Reg.1896/2006 or Mahnverfahren immediately. Step 5: Negotiate disputed balance against documented chargeback evidence. Step 6: Full judicial recovery if buyer refuses.

A tier-2 stamping supplier ships 180,000 brackets against a call-off to a German OEM. 90 days later: PPM chargeback, a tooling dispute, two unpaid invoices totalling EUR 640,000. The buyer’s AP team is polite. The production line keeps running on parts the supplier has not been paid for.

Manufacturing disputes by type

Dispute typeCreditor defenceRecovery path

PPM chargeback — late or undocumented

CISG Art.39

Buyer must notify in reasonable time with documentation. Late = forfeited.

EOP/Mahnverfahren

Tooling cost dispute

Separate agreement

Tooling governed by separate tooling agreement. Invoice debt = separate obligation.

Negotiate/litigate

Quality rejection after acceptance + installation

CISG Art.39 strong

Acceptance + installation = acceptance of conformity. Retroactive rejection = invalid.

CISG defence

ROT — unprocessed stock in warehouse

Recover goods

If registered in debtor jurisdiction and goods not incorporated: physical recovery.

ROT enforcement

Volume shortfall — call-off not honoured

Take-or-pay clause

Call-off orders: each shipment = separate invoice. Shortfall = separate claim.

Contract review

How do you collect B2B manufacturing debt?

1. Audit each invoice against CMR + quality acceptance. 2. CISG Art.39: quality dispute notified in time? Late = forfeited. 3. Separate undisputed invoices. 4. Place via EOP Reg.1896/2006 or Mahnverfahren immediately. 5. Negotiate disputed balance against documented evidence. EU Dir.2011/7: ECB+8pp + EUR 40 per invoice automatic.