Israeli Client Payment Chaser

Israeli Client Payment Chaser

Legal notice

This is a free information tool operated by an AI model. It explains the law and the procedure and helps you organise your own documents. All of its outputs are produced automatically by an AI model, with no involvement, review, or approval by an advocate. The output is not legal advice and not a legal opinion, but a general explanation and a template only: it does not read the full file of your matter, does not check current case law, and does not examine your specific circumstances. An AI model may err, omit data, or present a wrong conclusion.

Any text this tool drafts is an automatic draft for your personal preparation only. It is not a document prepared by an advocate and must not be relied on as evidence. This tool is not a substitute for advice that takes account of the particular circumstances and needs of each person. Before starting proceedings, signing a document, or filing with an authority or a court, consult an advocate. All use of its output is the user's sole responsibility.

Instructions

Step 1: Establish the Statutory Payment Deadline

Before chasing anything, fix the date the payment became legally late. This is governed by the Payment Ethics to Suppliers Law, 5777-2017 (חוק מוסר תשלומים לספקים, תשע"ז-2017).

• First check the law even applies to this client. The Payment Ethics to Suppliers Law governs a purchaser buying in the course of business: a state body, a local authority, or a business. It does NOT supply a due date for a private consumer client. If the client is a consumer there is no statutory default to fall back on: the due date is whatever the contract says, or a reasonable time where it says nothing, and the demand letter must not assert a statutory entitlement the creditor does not have. Everything downstream in this skill (the aging buckets, the reminder schedule, the interest start date, paragraph 3 of the demand letter) inherits this answer, so settle it before anything else.
• Default term when no payment term was agreed, for a business, state or municipal purchaser: 45 days. Note that the clock everywhere runs from when the invoice was submitted to the customer (hometza), not from when the supplier issued it. For a private business (sec. 3(z)) the term is 45 days from the end of the month of submission. For a state body (sec. 3(a)) there are two ALTERNATIVE limbs and the contract decides which applies, so do not conjoin them: 45 days from submission where the period is counted from submission, or 30 days from month-end where it is counted from month-end. A local authority (sec. 3(f)(1)) pays within 45 days from the end of the month of submission. Engineering and construction contracts run longer on the same either/or pattern (85 days from submission or 70 from month-end, as applicable).
• An agreed contractual term overrides the default, but the law caps how far it can be pushed out.
• Once the statutory (or agreed) due date passes, the debt is legally late: linkage and interest attach automatically, with no need for the creditor to "declare" lateness.
• What attaches to a late invoice under this law is ribit shkalit (shekel interest) from the payment due date, and dmei pigurim (late-payment fees) only from 30 days after it (בתוספת ריבית שקלית, ובחלוף 30 ימים מהמועד האמור - בתוספת דמי פיגורים). The two components have different start dates, so do not describe dmei pigurim as running from the due date. Do NOT quote a self-invented percentage in a reminder or demand letter. State that statutory late-payment interest applies from the due date and that the exact rate is the statutory rate published for the current quarter, or have the user confirm the rate with their accountant. See references/legal-escalation.md.

This statutory deadline, not a generic net-30/60/90 assumption, is what the aging buckets in Step 2 should be measured against.

Step 2: Import/Track Invoice Aging

Import outstanding invoices (from israeli-e-invoice output, if available, or manual entry) and categorize by aging buckets:

Age every invoice from its DUE date, not its issue date. This is the single most common error here. Under the statutory shotef+45 default an invoice issued at the very start of a month is not late until roughly 75 days after it was issued (30 to month-end plus 45), while one issued at month-end is late at about 46, so a bucket counted from the issue date fires a "you are late" reminder while the client is still well inside their lawful payment term. That damages the relationship and undercuts the demand letter later. Compute days_late = today - due_date using the Step 1 due date, and only then bucket:

If the user's own contract set a shorter term than the statutory default, use theirs; the statutory term is the fallback when nothing was agreed.

Track per-client details:

• Total amount owed across all invoices
• Oldest outstanding invoice date
• Payment history (on-time vs late patterns)
• Contact details (WhatsApp number, email, mailing address)

Store tracking data in persistent memory for ongoing monitoring across sessions. If persistent memory is unavailable, export as payment-chaser-data.json in the working directory and reload it at the start of each session.

Step 3: Configure Graduated Reminder Schedule

Set up a Shabbat/chagim-aware reminder escalation sequence. Every "Day N" below counts from the DUE date established in Step 1, not from the invoice date. Never send on Shabbat or a chag, and move a blocked reminder to the next business day. The full boundary rule (candle-lighting and nightfall offsets, the recipient's city, chol hamoed, erev chag, non-Jewish recipients, and the conservative Sunday-to-Thursday fallback when no calendar source is available) is in references/legal-escalation.md.

• Due date + 0 to 3 days, friendly WhatsApp: "היי [שם], רציתי לבדוק לגבי חשבונית מספר [X] מ-[DATE] בסך [AMOUNT] ש"ח. אשמח לעדכון."

• Due date + 15, follow-up WhatsApp: "שלום [שם], תזכורת נוספת לגבי חשבונית [X]. סה"כ לתשלום: [AMOUNT] ש"ח. פרטי העברה: [BANK DETAILS]."

• Due date + 30, formal email with invoice copy attached and a clear payment deadline. This is also the point at which dmei pigurim start to run under the suppliers law, which is worth stating in the email.

• Due date + 45, warning of potential legal steps: "שלום [שם], למרות פניותינו הקודמות, חשבונית [X] טרם שולמה. ללא תשלום תוך 14 יום, ניאלץ לשקול צעדים נוספים."

• Due date + 60 or more, escalation alert: Evaluate legal options (see Step 6). Generate formal demand letter (see Step 4).

See references/reminder-templates.md for complete, customizable templates at each stage.

Step 4: Generate Hebrew Demand Letters (Michtav Drisha (pre-suit demand letter))

Generate a formal Hebrew demand letter once the invoice is roughly 30 to 60 days past its DUE date. The letter must include:

1. Creditor details: Full name/business name, address, osek murshe/patur number
2. Debtor details: Full name/business name, address, registration number
3. Invoice details: Invoice number, date issued, original amount, any partial payments received
4. Total amount due: Including interest if applicable (see interest calculation below)
5. Payment deadline: Typically 14 days from letter date
6. Warning of legal action: Clear statement that failure to pay will result in legal proceedings

Interest: two distinct statutes, do not conflate them. A supplier's PRE-SUIT interest comes from the Payment Ethics to Suppliers Law: ribit shkalit from the due date, dmei pigurim only 30 days later (בתוספת ריבית שקלית, ובחלוף 30 ימים מהמועד האמור - בתוספת דמי פיגורים). Interest on a JUDGMENT is set by the court under the Adjudication of Interest and Linkage Law; the agent does not compute it. Neither is the Bank of Israel monetary-policy rate, and no rate is hard-coded here because it re-publishes quarterly. If the current quarter's figure is not confirmed, write בתוספת ריבית והצמדה כדין ממועד הפירעון, which claims the full entitlement without asserting a number. Rate source and accrual mechanics: references/legal-escalation.md.

Late-payment interest is inside the VAT base. Sec. 7 of the VAT Law defines the price of a transaction as including ריבית או כל תשלום אחר בשל פיגור בתשלום ופיצויים בשל הפרת ההסכם כשאין עמה ביטול העסקה, so interest an osek murshe collects is part of the taxable consideration, not a tax-free extra. The closing words matter: that assumes the breach did not cancel the transaction. Flag it so the user does not treat collected interest as clean cash.

Delivery options:

• Registered mail (doar rashum / דואר רשום): provides legal proof of sending. Keep the postal receipt.
• Email with read receipt: supplementary, not a replacement for registered mail for legal purposes.

See references/legal-escalation.md for full demand letter requirements and format.

Step 5: Track Payment Promises and Negotiate

Record and follow up on payment commitments:

Record every promise with its amount, date and channel, and follow up the day after. Update the balance on each partial payment and confirm it. Timestamp every interaction: this log is the evidence if the file reaches court. If the debtor asks for a payment plan, see Step 5.5 BEFORE agreeing, because that request is the moment the debt can be converted into something enforceable.

Step 5.5: Take the Cheap Rungs Before Court

Court is the expensive rung, and the ladder has cheaper ones that only work while the debtor still wants something from you. Try these first.

• Convert the debt into a directly enforceable instrument while you still have leverage. If the debtor asks for more time or a payment plan, do not simply agree by message. Ask for post-dated cheques covering the instalments, or a signed shtar chov (promissory note). Either one can be filed straight at the Enforcement Office under Step 7 with no court case at all, which removes the slowest and most expensive part of the process. Against a company with nothing in it, ask for a personal guarantee (ערבות אישית) from the controlling shareholder, or their signature as a co-signer (ערב) on the note. An instrument signed only by the company is worth exactly what the company is worth, which is the problem you are trying to solve; a guarantee converts it into a claim against a person. Check too that a company cheque or note carries the authorised signatories, or it fails at the Enforcement Office. A debtor negotiating for time is usually willing to sign; one who has stopped answering is not. This is the highest-value five minutes in the whole workflow.
• Give any settlement the force of a judgment. Where a case is already filed, have a reduced sum or instalment plan recorded as a psak din beheskama (consent judgment). A settlement that is only an email is another contract you would have to sue on.
• Verify who you are actually dealing with before escalating. Check the debtor at the Companies Registrar (Rasham HaChavarot) via gov.il: confirm the exact registered name and number, and whether the company is active, in liquidation, or struck off. A demand letter addressed to a trading name that is not the legal entity is worthless, and there is no point spending a filing fee on a company already in liquidation. If the counterparty turns out to be an individual or an osek rather than a company, the forum does not change (Small Claims takes claims against individuals and companies alike; it is the CLAIMANT who must be an individual), but three practical things do: there is no Companies Registrar record, so identify them from the contract, the invoice or a cheque; wage and account garnishment later runs into protected-minimum limits that do not apply to a company; and personal insolvency follows a different track.
• Retention lien (ikavon). Where you lawfully hold something of the debtor's from the same transaction, a retention right may let you keep it until payment. Fact-specific and easy to get wrong: raise it as a question for a lawyer, not a unilateral step, especially where withholding work product could cause loss.

A disputed debt is a different animal, and the shortcuts stop working on it. Silence is often a dispute the client has not voiced yet, so establish which one you have before spending money. If the debtor genuinely contests the work or the amount, get the objection in writing NOW, while they are still answering: an allegation of defective work first raised in a defence is far harder to rebut than one you can show they made late and inconsistently. The cheque and promissory-note route in Step 7 is NOT a shortcut here, because the debtor's objection moves the file to court anyway and the opening fee is spent, so a contested debt should go to court directly. Pressing enforcement on a debt with a real defence also carries a costs risk, since costs follow the event. Where liability is genuinely in issue rather than merely inconvenient, route the user to a lawyer before escalating.

If the debtor looks like they are disappearing, jump the ladder. The sequence takes months and a judgment against an emptied company is worth nothing. If the debtor is winding down, selling up, moving money, changing entity or defaulting to other suppliers, stop escalating politely and get advice on a temporary attachment (ikul zmani), applied for with or just after the claim. It is discretionary, needs a prima facie cause, a real concern the judgment would be frustrated, and an undertaking plus security. Small Claims is a poor forum for it, itself a reason such a case belongs in Magistrate Court.

Step 6: Evaluate Small Claims Court (Tvi'ot Ktanot) Eligibility

When a debt is well past its due date (roughly 60+ days late) and collection has failed, assess eligibility. Full filing process in references/legal-escalation.md.

Ask this first: is the CLAIMANT an individual? Only a private individual may file, and an osek murshe or osek patur counts as one. A company, partnership or amuta is barred outright (חברה בע"מ, שותפות או עמותה לא יוכלו להגיש תביעה לבית משפט זה) and must go to Magistrate Court whatever the amount. This disqualifies more users than the threshold does, so ask before anything else.

Threshold: up to 39,900 NIS (as of 1.1.2026; verify, it is updated periodically).

Recommend a lawyer rather than self-filing when: the debtor genuinely disputes liability (see Step 5.5); the debtor is insolvent or in liquidation; the debt is near the 7-year limitation deadline and a procedural slip would forfeit it; the debtor is outside Israel; or the amount exceeds the threshold. Otherwise a documented, undisputed invoice under the threshold is a good self-serve candidate.

Other eligibility points: documentation must exist (invoice, contract or PO, delivery confirmation). A demand letter is NOT a precondition of filing under Israeli law, though it is worth sending: it fixes the date the debtor plainly knew of the demand and evidences the collection effort. The claim form requires declaring how many small claims you filed in the past year, and more than five in the same court that year lets the court transfer the case to Magistrate Court; it is not a bar.

Filing: fee is 1% of the claim, minimum 50 NIS (confirm on the courts fee page, as fees are set by regulation and change). Filing to hearing is typically 30-60 days. Venue is a CHOICE between two live options and the list is closed: reg. 2(a) of the Small Claims (Procedure) Regulations allows the defendant's residence or place of business, or the place of the act or omission sued on. The older limbs about where the undertaking was made or was to be performed are repealed, so do not rely on them. Note reg. 2(a) applies על אף האמור בכל הסכם שבין בעלי הדין, so a contractual venue clause does NOT bind here, unlike general civil procedure; and reg. 2(b) narrows an online-publication or online-trade claim to the defendant's or the plaintiff's residence or business only. Never tell a user they must travel to the debtor's city. Representation is barred by default and permitted only with the court's leave, so do not say lawyers are flatly forbidden, and do not say one is required.

Above the threshold the claim goes to Magistrate Court, where representation is not legally required either but is strongly advisable, because full procedure and evidence rules apply and costs follow the event.

Step 6.5: Check for Insolvency Before Escalating Further

This is the one place in the workflow where doing nothing forfeits the debt, so check it before spending money on a claim or an enforcement file.

If insolvency proceedings have been opened against the debtor under the Insolvency and Economic Rehabilitation Law, 5778-2018, two things change at once:

• Individual collection stops. Chasing the debtor directly or pressing an existing enforcement file is no longer permitted once a stay applies. Continuing to send the Step 3 reminders then is not merely futile, it is improper.
• The creditor must file a proof of claim (tvi'at chov) with the trustee (ne'eman) within six months of PUBLICATION of the opening order (sec. 210(a) of the Insolvency Law). A debt arising after the order is filed within 45 days of arising or by the end of that six months, whichever is later (210(b)), and the trustee may extend for good cause (210(c)). Miss it and the debt is not counted in the distribution. Six months sounds generous and is not: diarise it the day you learn of the proceedings, and confirm the date against the published notice, since the clock runs from publication rather than from when you heard.

Signals worth checking before escalation: the Companies Registrar status from Step 5.5, a liquidation or stay notice, or the debtor saying they cannot pay anyone. When any of these appear, route the user to a lawyer promptly, because the deadline runs whether or not they act.

Step 7: Open an Enforcement Office (Hotza'a LaPo'al) File to Collect

A judgment is not money in the bank. Collecting means opening a file with the Enforcement and Collection Authority. Fees, forms and the full process are in references/legal-escalation.md; the four things that change decisions are here.

• When you may file. The date for performance set IN the judgment governs. Only where it sets none is the wait 30 days from the date given, running from service where the judgment issued in the debtor's absence and you had to serve it. Sec. 6(b1) lets the registrar allow earlier filing on affidavit where waiting would frustrate enforcement. Read the judgment before telling anyone to wait.
• The court-free route. A dishonoured cheque with the bank's Notice of Dishonor, or a signed promissory note, can be filed directly as a notes-and-cheques file with no judgment. It is the fastest route for an UNDISPUTED debt only: an objection sends it to court anyway (see the disputed-debt warning in Step 5.5).
• Nothing coercive happens until the azhara is served and its period runs. Files stall here for months when the debtor cannot be served at the address on file, which is another reason to have verified their registered details in Step 5.5.
• What actually moves a debtor who HAS money. Beyond liens and garnishment, sec. 66a lets the registrar impose restrictions, on request or on its own initiative, and the list is closed: barring an Israeli passport or travel document; an exit ban; designation as a lakoach mugbal meyuchad under the Cheques Without Cover Law, 5741-1981; barring use of a payment card; and barring the debtor from founding a corporation or being a baal inyan in one. There is no power to restrict a driving licence and none to stop the debtor opening bank accounts (a sixth limb once existed and is marked deleted, which is why the belief persists). Do not confuse the sec. 66a(3) cheque restriction with חייב מוגבל באמצעים, a different declaration that sets a monthly instalment and in practice constrains the CREDITOR. These are also not available on demand: sec. 66b gates them, the usual route being that the debtor was brought before the registrar and shown able to pay yet evading, with no reasonable explanation, on a judgment debt above 500 NIS.
• Ability investigation (chakirat yecholet). Where the debtor claims they cannot pay, ask the registrar to summon them for an examination of means on oath. It tests the claim, produces the asset information liens and restrictions depend on, and is often what unlocks sec. 66b.

Step 8: Generate Aging Reports and Cash Flow Forecasts

Produce a per-client aging report (by days-late bucket from Step 2, oldest invoice, total owed, month-on-month trend), a forecast weighted by each client's payment history, and a monthly summary. Score each client Reliable / Slow payer / Problematic and use that to set escalation speed rather than applying one ladder to everyone. Export PDF or CSV.

Two domain-specific points:

• Bucket by days LATE, never by invoice age. A report on invoice age overstates the problem and has the user chasing clients still within terms.
• Do not forget the VAT already paid on an unpaid invoice. An osek murshe on the ordinary (accrual) basis reports and remits VAT on an invoice in the period it was issued, so on an unpaid invoice they are out of pocket for tax on money never received. Israeli VAT practice provides a bad-debt route (chov avud) to recover it by issuing a credit note once collection has genuinely failed, and the documented collection trail this skill produces is exactly the evidence that route requires. The eligibility window and required documentation are time-bound and are NOT stated here: have the user confirm the current rules with their accountant or the VAT Authority. A separate income-tax deduction exists for a debt established as irrecoverable. Tell the user to preserve every reminder, demand letter and delivery receipt for this purpose, not only for the claim.

Examples

Example 1: Five overdue invoices

User says: "I have 5 unpaid invoices from the last 3 months, can you help me collect?" Establish each invoice's DUE date first (Step 1), including whether the client is a business the suppliers law covers at all. Only then bucket by days late, which typically reveals that one or two are not actually late yet. Configure the reminder ladder from the due dates, draft the formal email for the ones around 30 days late, and prepare a demand letter for the oldest. Report the total outstanding and, separately, the total actually overdue, because those are different numbers and the user needs both.

Example 2: Client promised to pay and did not

User says: "ABC Ltd promised to pay invoice 1234 two weeks ago but still nothing" Pull the communication history and note the broken promise with its date. Before escalating, verify ABC Ltd at the Companies Registrar: exact registered name, number, and whether it is active or in liquidation. Then take the cheap rung first (Step 5.5): a client asking for more time is a client who will often sign post-dated cheques or a promissory note, which converts the debt into something enforceable without a court case. If that fails, draft the demand letter under Step 4 with the registered name, send it by registered mail, and assess Small Claims eligibility, checking first that the claimant is an individual or osek rather than a company.

Example 3: Monthly collection report

User says: "Show me where I stand with all my outstanding invoices this month" Produce the aging report bucketed by days late, a forecast weighted by each client's payment history, and the month's collection rate. Score each client Reliable / Slow payer / Problematic and use that to set escalation speed. Flag any invoice approaching the 7-year limitation period, and flag the VAT already remitted on invoices now looking irrecoverable so the user can raise the bad-debt route with their accountant.

Bundled Resources

References

• references/legal-escalation.md - Israeli legal framework for debt collection: demand letter (michtav hitraa / michtav drisha, a pre-suit demand letter) requirements, Small Claims Court (tvi'ot ktanot) thresholds and filing process, interest calculation rules, and registered mail documentation. Consult when preparing legal escalation in Steps 4 and 6.
• references/reminder-templates.md - WhatsApp and email reminder templates in Hebrew for each escalation stage (friendly, follow-up, formal, pre-legal). Templates are customizable with placeholder fields. Consult when configuring reminder messages in Step 3.

Reference Links

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Gotchas

• Shotef is not net-N. "Shotef + 30" means the end of the current month plus 30 days, not 30 days from the invoice date. Agents routinely compute the due date as if it were net-30 and then chase a client who is not yet late.
• Age from the due date, not the invoice date. Every bucket, reminder and letter in this skill keys off the Step 1 due date. An agent that reverts to invoice age will send a late notice while the client is still within terms.
• Do not conflate the two interest statutes, and never quote the BoI rate. A supplier's pre-suit interest comes from the Payment Ethics to Suppliers Law (ribit shkalit from the due date, dmei pigurim 30 days later); a court sets judgment interest under the Adjudication of Interest and Linkage Law. The Bank of Israel monetary-policy rate is neither. When the current quarter's rate is not confirmed, write בתוספת ריבית והצמדה כדין ממועד הפירעון and assert no number.
• Winning is not collecting. A judgment does nothing until an enforcement file is opened, which cannot happen until 30 days after judgment, and nothing coercive happens there until the warning is served. Agents stop at "you won".
• A 7-year limitation period, not 3. An ordinary debt or unpaid invoice runs 7 years (sec. 5(1) of the Limitation Law, בשאינו מקרקעין - שבע שנים); a judgment runs 25 (sec. 21), and a debt in an open enforcement file does not lapse at 7. Telling a user a commercial invoice is time-barred at 3 years abandons a collectable debt.
• Hebrew is a practical norm here, not an evidentiary rule. Write to Hebrew-speaking clients in Hebrew because that is what gets processed, but foreign-language documents are admissible; the court may simply require a certified translation. Keep both versions rather than discarding English correspondence.

Troubleshooting

Error: "Reminder sent on Shabbat/holiday"

Cause: the calendar was not loaded, or sunset was used instead of candle-lighting. Solution: apply the boundary rule in references/legal-escalation.md, resolving times for the RECIPIENT's city. With no calendar source, fall back to Sunday-Thursday 09:00-16:00 rather than sending unchecked.

Error: "Small Claims threshold exceeded"

Cause: Invoice amount exceeds the Small Claims Court maximum (currently 39,900 NIS). Solution: For amounts above the threshold, the claim must go to Magistrate Court (Beit Mishpat Shalom). A lawyer is not legally required there, but is strongly advisable. Recommend the user consult a lawyer. For multiple invoices to the same debtor, consider whether they can be combined or must be filed separately.

Error: "Demand letter delivery not confirmed"

Cause: registered mail was returned or not collected. Solution: keep the postal receipt; it evidences dispatch, which is what fixes the deadline's start date. If the address is wrong, re-check the debtor's registered details (Step 5.5) before re-sending.

Error: "Interest calculation disputed"

Cause: Applied the wrong interest rate or conflated the two statutes. Solution: separate the two statutes as set out in Step 4, and if the current quarter's rate is not confirmed, fall back to בתוספת ריבית והצמדה כדין ממועד הפירעון rather than a figure.