Charging your clients or customers interest on past due balances can be an excellent incentive for them to pay your invoices. And if you properly charge interest, a judge will award you pre-judgment interest if you have to file suit to collect. Also, if you’re trying to resolve a bad debt, by charging interest, you can then offer to write-off or reduce the interest when trying to get your client or customer to settle the account.
When & How to Bill for Interest
Our collections law firm has been very successful in obtaining judgments that provide for pre-judgment interest and in offering to waive interest as a negotiating tool. In order to be able to charge interest, you will need to have a contract that is signed by your client/customer, and that contract must conspicuously provide for interest on past due balances. You will also need to send bills to your client or customer that accurately calculate the interest and the new balance that is due.
The contract that is signed by your client or customer will need to set forth when the interest will commence. Stating the date when payment(s) is/are due and the number of days after each payment due-date from which interest accrues is vital. Also, the contract will need to say whether the interest is compounded. If you bill monthly and your contract says that interest is compounded monthly, then the next month’s bill will show a line item for interest on the new balance (the old balance due plus the accrued interest).
It is very important that you carefully look at how your billing software program charges interest. Many times, businesses and professionals don’t realize that their billing software program automatically compounds interest. This can be a useful tool when correctly implemented, but it may be a problem if used without the contractual statements listed above.
Understanding and legitimately charging interest can be complicated. Our collections attorneys are available to provide you advice on how much interest you may lawfully charge and how to properly provide for the interest in your contracts and on your invoices.
Experienced Collections Attorneys in Maryland
If you are interested in receiving a contingency fee quote or an hourly fee quote for Andalman & Flynn to collect your business accounts receivables and/or enforce your judgments, please contact me at meflynn@a-f.net or 301-563-6685.
About Andalman & Flynn Collections: For decades, businesses and professionals have been turning to the experienced collections attorneys at Andalman & Flynn for their debt recovery needs. A licensed collections agency, their experienced team successfully navigates the complex laws surrounding debt collection practices. The firm combines cutting-edge technology with savvy, effective debt resolution methods that result in high success rates and fast recovery times. For more information, please visit www.andalmanflynncollections.com.