Last updated: 10 May 2023

UK Collection Costs & Interest Guide

At DebtCo, we are dedicated to helping our clients recover outstanding debts efficiently and fairly. Below you will find information on the costs and interest that can be added to both B2B (Business-to-Business) and B2C (Business-to-Consumer) cases.

B2B (Business-to-Business) Cases

Interest and Costs on Unpaid Debts:

  1. Interest:

    • We apply statutory interest at 8% plus the Bank of England base rate to overdue invoices. This interest begins to accrue from the day after the payment due date.
  2. Compensation for Recovery Costs:

    • Debts up to £999.99: £40
    • Debts between £1,000 and £9,999.99: £70
    • Debts of £10,000 or more: £100
  3. Reasonable Recovery Costs:

    • If the cost of recovering the debt exceeds the fixed compensation, additional reasonable costs may be claimed.

Our practices for business cases follow the regulations set out in the Late Payment of Commercial Debts (Interest) Act 1998.

B2C (Business-to-Consumer) Cases

Additional Information on Consumer Debts:

  1. Contractual Interest:

    • If the original agreement includes a clause about charging interest on overdue amounts, the creditor can charge the interest as specified in the contract.
  2. Statutory Interest:

    • Unlike commercial debts, statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998 does not apply to consumer debts.
  3. Costs on Consumer Debts:

    • Court Costs: If a creditor takes legal action to recover the debt, they can claim court fees and legal costs. These are usually added to the debt if the court grants a judgment in favor of the creditor.
    • Collection Costs: Debt collection agencies may add reasonable costs for recovering the debt, but these must be outlined in the original credit agreement or be legally permissible.
    • Default Charges: Creditors can add default charges, such as late payment fees, but these must be fair and proportional to the costs incurred by the creditor. Excessive fees can be challenged under the Unfair Terms in Consumer Contracts Regulations 1999.

Interest and Costs on Unpaid Debts:

  1. Interest:

    • For consumer debts, we would advise the interest at the Bank of England Bank Rate from the due date of the invoice, ensuring fairness and transparency. The base rate (8%) would not be applied.
  2. Late Payment Fees:

    • Based on experience, we have found the following to be reasonable and fair:
      • Late payment fees are set at 50% of the compensation advised for business cases:
        • Debts up to £999.99: £20
        • Debts between £1,000 and £9,999.99: £35
        • Debts of £10,000 or more: £50

Uploading and Managing Cases

  1. Easy Case Management:

    • Our platform provides an intuitive interface for uploading and managing debt cases, ensuring you have complete visibility over the recovery process.
  2. Breathing Space and Collections Workflow:

    • Breathing Space: During the 15-day period, no costs or interest will be added, giving the debtor a fair chance to settle the debt.
    • Collections Workflow: If the debt remains unresolved, the case will move into the collections workflow, where costs and interest as outlined will be applied.

Contact Us

If you have any questions or need further assistance, please do not hesitate to contact our support team. We are here to help you every step of the way.