In the event of non-payment or late payment of invoices by debtors, there is the possibility of charging statutory interest. Regarding the rate of statutory interest, a distinction is made between businesses/government agencies and consumers. Efficient debtor management is aimed at preventing debtor default and is an important part of business operations for cash flow purposes. Payt provides a perfect system for managing and following up on debtors, but non-payment cannot always be ruled out. Therefore, it is good to know what statutory interest is and when you are allowed to calculate it.
What is statutory interest?
Statutory interest refers to the interest a creditor may charge in the event of a payment delay. If an invoice is not paid within the payment term, the debtor is in default and there is effectively a payment delay.
How high is the statutory interest?
The statutory interest is 6% for consumers for so-called non-commercial transactions and 12% for businesses and governments concerning commercial transactions. The statutory interest can be adjusted every six months. Therefore, check the current interest rates at the time of charging statutory interest to be sure.
Calculating statutory interest
Statutory interest is calculated on the outstanding amount of the invoice. It is not necessary to first send a reminder or warning to businesses, as the regulations arising from the law automatically come into effect. If the debtor is a consumer, they must first receive a free reminder.
Payment term and statutory interest
It is good to know that regarding the payment term, a distinction is also made between consumers, businesses, and governments. For example, there is no statutory payment term for consumers, but there must be a reasonable payment term. The statutory payment term for businesses is a maximum of 60 days and for large companies 30 days. If businesses have not agreed on a payment term, a statutory payment term of 30 days applies. Governments must pay invoices within 30 days of receipt.
Simple or compound statutory interest
When calculating statutory interest, besides the choice between consumer interest or commercial interest, another aspect is important. It depends on the situation whether simple or compound interest applies. With compound interest, there is interest on interest, and this applies if the debtor has been in default for a year. It is then allowed to add the statutory interest to the principal sum and calculate the statutory interest on that again.
What is contractual interest?
Instead of charging statutory interest, it is also possible to charge contractual interest. Parties are free to determine the rate of contractual interest themselves, but there are limits. For example, the rate of interest should not be contrary to good morals or public order. In that case, the provision for contractual interest may be considered void. This means the provision in the general terms and conditions can be annulled if it is unreasonably burdensome.
