Debt recovery from a logistics company

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The most common debt problems in the logistics sector

The recovery of a debt from a logistics company in favour of a carrier is one of the most common debt-related issues in the logistics sector. In this sector, it is very important to keep a close eye on the payment of invoices, as once the limitation period is missed, there may be no chance to collect the debt. Our clients complain most often about inattention, missed limitation periods and malicious customers who do not pay on time. 

Limitation period missed

Logistics companies and carriers are guided by international agreements when transporting goods, the most important of which is the Convention on the Contract for the International Carriage of Goods by Road (CMR). This Convention contains a clearly defined limitation period, which is the same for both the consignor and the carrier.

The limitation period is 1 year, unless intentional acts are established, in which case the limitation period is 3 years.

Debt recovery from the carrier is possible if the carrier has improperly performed his work or has lost the goods. If the carrier partially loses, damages or delivers the goods to the consignee with delay, the limitation period starts to run from the date of damages suffered (loss, damage or delivery). In the case of total loss, the limitation period starts to run on the thirtieth day after the day on which delivery was due, or, in the absence of delivery term, 60 days after the day on which the goods were received from the consignor. In other cases, the limitation period starts to run 3 months after the signing of the carriage contract

Thus, under the Convention, the carrier is paid for the services rendered within 3 months and the limitation period starts to run from the signing of the contract for the provision of services. Both carriers and logistics companies must keep close track of unpaid invoices and remember to demand payment in writing from their debtors in order to avoid the expiry of the limitation period (which may be extended or renewed only in exceptional cases).

Once the limitation period has expired, it can be restored or renewed under certain conditions (if it has been missed for serious reasons). This is particularly the case where the service provider to whom the debt for the services rendered is owed has actively attempted to collect the debt and the debtor has delayed repayment by various means.

The Lithuanian case law recommends submitting a claim (in writing) to the debtor, clearly stating the claim, the damage caused and the amount of the damage, as well as the grounds for liability; the claim must be accompanied by documents supporting its validity. Such a claim will be particularly useful if debt recovery is brought before court.  

Maliciously non-paying customers

It is often the case that one of the parties to a carrier’s contract (usually the customer) maliciously avoids paying a debt due for damages suffered or services rendered. The party hopes that the other party will miss the limitation period within which they can make their claims for payment of the debt. Carriers are the most likely to incur such debts, so we recommend that you keep a close eye on the payment of invoices and the limitation periods to ensure that this happens as rarely as possible.

The Convention makes an exception for such cases by extending the limitation period to 3 years. In order to extend the limitation period to 3 years, you must prove that the debtor has acted deliberately to avoid the obligation to pay the debt. Often, you must also convince the court that efforts have been made to collect the debt on time. 

How can I protect myself against debt in the future?

International carriage means that legal proceedings will be subject to the laws of several different countries and various international agreements. This is a particularly favourable environment for abuse by dishonest debtors. How can I avoid tedious and lengthy debt payment reminders and complicated legal proceedings? It is important to prepare documentation carefully, choose partners with caution and have an effective system to monitor deadlines. 

Customer due diligence

The first step you need to take before deciding to deal with a new customer (whether a company or a natural person) is to check their reputation and creditworthiness. If you are dealing with an unfamiliar company, make sure you find out about its financial situation, whether it has any debts and what its legal status is. If you know people who have dealt with the customer, ask them for a reference or recommendation. 

Formalised contract/order

First, a well-drafted contract should be signed by both parties and clearly define the terms of payment for the services, the prices, penalties, indemnities and other important conditions. Clearly defining the liability of each party in the contract is an advantage in the event of non-payment for works by the customer or damage/loss of goods.

Neat documentation will help your partners make payments in an orderly manner and, in the event of a debt that cannot be collected out of court, will be useful in proving the debt in court. 

Payment terms and limitation periods

Tracking of deadlines in the logistics sector is of particular importance due to the short limitation periods, which is why the process is often optimised by implementing electronic systems (CRM). They are essential to track both the payment of invoices, the limitation periods for each invoice, damages and other issues.


An alternative option is to work with a debt collection company which will closely monitor the debts incurred and immediately start demanding repayment of the debt.

Recover what belongs to YOU!

The revenue generated by the logistics sector accounts for a major share of Lithuania’s GDP budget. As revenues and turnover increase, so does the number of unpaid invoices. This sector is regulated not only by national legislation, but also by international conventions which describe the settlement procedures and limitation periods in great detail.