From 1 September 2023, there will be new rules regarding your terms and conditions. A new law introduces stricter rules when collecting outstanding invoices.
What has changed towards private persons? 🔎
A first reminder is always free of charge for private customers. Even if the payment term of your sales invoice has expired (by a large margin), you cannot yet charge damages or interest.
From now on, you may only charge damages or interest to a private person 14 days after sending your first payment reminder.
Do you send this reminder by post?
Then the term of 14 days only starts to run after 3 working days, an estimate of the time it takes for your letter to reach the customer.
Maximum interest 💶
After the expiry of 14 days, you may (not must) charge interest and damages for partial or full non-payment. But attention, only if this is stated in the terms and conditions of your sales invoice!
The maximum interest you may charge may fluctuate; in August 2023 it amounts to 12% on an annual basis.
Example: a customer pays an invoice for €1,000 60 days late. The statutory interest then amounts to €19.73 (€1,000 x 12% x 60/365).
You may only charge this interest 14 days after sending a first payment reminder. However, a small to medium-sized enterprise (SME), which includes sole proprietors, may start counting the interest from the first day you sent the payment reminder.
Compensation
Interest should not be confused with damages, which are two separate issues. You can therefore charge interest and/or damages.
You can only charge these damages if they are explicitly mentioned in the general terms and conditions of your sales invoice.
These maximum amounts you may charge have been tightened up as from 01/09/2023:
- Outstanding amounts up to €150: max. €20 compensation
- Outstanding amounts between €150.01 and €500: max €30 compensation, plus 10% of the amount above €150.
- Outstanding amounts from €500.01: max €65 compensation, plus 5% of the amount above €500, with a total maximum of €2,000.
What should you do regarding your terms and conditions?
Know that you should never be required to charge interest and/or compensation. The choice always lies with you as a business owner.
But ideally, you should add the updated reference to interest and damages to your terms and conditions. You don’t have to actually apply it, but you at least have the option. For example, that adjustment/addition to your terms and conditions could look like this:
In the absence of full payment by the customer within 14 calendar days (+ three working days if not by electronic means) after sending the first payment reminder, compensation of:
- €20 if the amount due is less than or equal to €150;
- €30 plus 10% of the amount due above €150;
- €65 plus 5% of the amount due above €500, with a total limit of €2,000.
In the absence of full payment by the customer within 14 calendar days (+ three working days if not by electronic means) of the sending of the first payment reminder, the customer shall automatically and without formal notice owe interest at the legal rate for late payment in commercial transactions, see Article 5(2) of the Law of 2 August 2002 on combating late payment in commercial transactions. This interest is calculated on the sum still to be paid.
