When you have an outstanding invoice with a debtor, you are allowed to add interest to the balance as soon as the invoice becomes overdue.
However, you cannot simply add any figure to the original amount. The interest rate you can charge will depend on the location of your debtor and the age of the invoice.
Applying interest rates
If, for example, your debtor is based in the Czechia and has only just gone over the payment date, then you can apply the current interest rate. However, interest rates are revised every 6 months in January and in June. Therefore, if your invoice became outstanding in July last year, you may need to apply 2 interest rates to the unpaid balance.
How to work out what should be applied and when
Thankfully it is not too difficult to find out what interest you should apply and when. There are many calculators available online to help with this task. To ensure you are using the must up to date information though, use a reputable site. We recommend the European Union website.
Debt recovery costs on late payments
There are other debt recovery costs that you can charge to your debtor. Again however, these are very different depending on the country of your debtor. For example, in the UK, compensation costs can be added depending on the amount of debt:
|Amount of debt||Debt recovery charges|
|Up to £999.99||£40|
|£10,000 or more||£100|
Inform your customer
If you decide to apply compensation costs and interest, you should of course inform your customer by supplying them with an updated invoice that details the extra costs and highlights the new outstanding balance.
Specialists in debt recovery
It is important to be aware that charging interest or compensation costs doesn’t always get your debtor to pay. At Bierens, we specialize in debt recovery. We have more than 38 international lawyers who speak the same language as your debtor. Our experience, knowledge and expertise will make you more likely to get your money back. If you have an unpaid invoice, get in touch with us today.