One of the most common questions a debtor asks is why the amount claimed is larger than the invoice they remember. The answer usually lies in two things: interest and recovery costs. Both are legitimate in the right circumstances — and both have limits.
Interest on overdue accounts
Interest can generally be charged on a late commercial payment where there is a basis for it — most often a clause in a written contract or terms of trade, or a statutory entitlement. The key word is basis. Interest applied without one is open to challenge, and an overstated claim weakens the whole recovery.
Recovery costs
Similarly, the cost of recovering a debt can sometimes be passed on to the debtor — but only where the agreement between the parties clearly provides for it. A well-drafted set of terms of trade will say so explicitly; a handshake arrangement will not.
Why accuracy protects the creditor
It can be tempting to load every possible charge onto an overdue account. In practice, the opposite approach recovers more. A claim where every figure is correct and supportable is harder to dispute and holds up if the matter is escalated. A claim padded with charges that cannot be substantiated invites exactly the dispute a creditor wants to avoid.
This is one reason a professional recovery is worth its commission: the amount pursued is the amount that can properly be claimed — no more, and no less. See how we work.
This article is general information, not legal or financial advice. Whether interest or costs may be added depends on the contract and the law that applies — obtain advice specific to your situation.