Can you collect interest on a past due invoice?
April 06, 2015 at 1:26 PM
If you process past due invoices, you may be adding interest to the balance. But are you complying with state laws? A collection agency can collect on interest as long as the interest that is charged adheres with state laws. In Nebraska, the maximum interest rate that can be charge is 16% per annum, or 1.33% per month, and this must be agreed upon in writing with the consumer/debtor. Late charge, late fee, rebilling charge, etc., all are considered to be interest in Nebraska. PCS is unable to collect on accounts with interest above the allowed maximum. (Nebraska Revised Statutes, Section 45-101.03 & Section 45-101.04).
What does it mean, "must be agreed upon in writing with the consumer/debtor". An initial invoice should clearly include what interest, late charge, late fee or rebilling charge will be in the event the bill in not paid on time. If not, the collection agency will not be able to collect any interest or fees.
With this in mind, look over your invoice forms and your processes. If you have other questions, we offer many resources on this website. For starters, review "The Anatomy of a Great Invoice". You may also find the FAQ page helpful in answering your question. Also review the consumer questions. That will give you some insight too!