Can Collection Companies Charge Interest? B2B Rules Explained
A commercial collection agency does not charge its own interest to the debtor. It calculates and claims interest that the creditor is already entitled to under statute or contract — and that entitlement exists regardless of whether an agency is involved. In the EU, EU Directive 2011/7/EU mandates a minimum B2B late payment interest rate of ECB base rate plus 8 percentage points, running automatically from the day after the invoice due date without any demand required, plus EUR 40 fixed recovery compensation per invoice. In Germany, BGB §288(2) sets the rate at base rate plus 9 percentage points for B2B. In the UK, the Late Payment of Commercial Debts (Interest) Act 1998 grants BoE base rate plus 8 percentage points plus tiered per-invoice compensation. The agency is the creditor’s agent — it collects what the creditor is owed, and is paid by the creditor from what is recovered. The agency’s contingency fee (typically 10 to 25%) is a creditor cost, not a debtor obligation.
Your overdue invoice has been sitting with a third-party agency for three weeks, and the first statement back from them shows a number larger than your original claim. The CFO calls asking whether the agency is inflating the debt. The short answer: no. The larger number reflects statutory interest and fixed compensation that have been accruing since the invoice due date — rights that belonged to the creditor throughout the internal chasing period, but that no one was formally claiming. Here is the complete map of who can charge what to whom, in which jurisdiction.
Can collection companies charge interest to the debtor?
In almost every B2B commercial jurisdiction, the answer is no — a collection agency cannot levy its own interest rate on a debtor. The agency is the creditor’s agent; it enforces rights that already exist in the creditor’s books. Three distinct roles govern every collection file. The creditor owns the original invoice principal, statutory or contractual late payment interest, and statutory fixed compensation. The debtor owes those amounts under contract and statute. The agency is paid by the creditor, typically as a percentage of collected funds. The agency’s fee does not appear on the demand sent to the debtor; it is deducted from the proceeds before remittance to the creditor.
What the agency can and does include in its demand to the debtor — on the creditor’s behalf — is the creditor’s full statutory entitlement: principal plus interest plus fixed compensation. This is not the agency charging additional amounts; it is the agency collecting amounts the debtor already owed and the creditor was not previously claiming.
What statutory interest rates apply by jurisdiction?
EU Directive 2011/7/EU sets a mandatory B2B floor applicable in all 27 EU member states: ECB base rate plus 8 percentage points, accruing from the day after the contractual or statutory due date, plus EUR 40 fixed recovery compensation per invoice without any proof of actual collection costs. Member states may set higher rates. Germany: BGB §288(2) sets base rate plus 9 percentage points for B2B claims. France: Article L.441-10 Code de commerce sets ECB plus 10 percentage points plus EUR 40. Italy: Legislative Decree 231/2002 sets ECB plus 8pp plus EUR 40. Spain: Ley 3/2004 sets ECB plus 8pp plus EUR 40. Netherlands: the Wet Incasso Kosten (WIK) permits collection of extrajudicial costs from the debtor on a sliding scale. UK: BoE base rate plus 8pp, plus GBP 40 (claims under GBP 1,000), GBP 70 (GBP 1,000 to GBP 9,999), or GBP 100 (GBP 10,000 and above) under the Late Payment of Commercial Debts (Interest) Act 1998.
In the United States, there is no federal statutory interest rate for B2B commercial debts. Applicable interest is determined by the contract or, absent a contractual rate, by the state’s statutory interest rate. California: 10% per annum under Cal. Constitution Art. XV §1. New York: 9% per annum under CPLR §§5001-5004. Texas: 6% per annum under Chapter 302 Business and Commerce Code absent a contractual rate. US commercial creditors should include contractual interest rates in all supply agreements to preserve rate certainty.
What fees can a debt collector add to the original debt?
Under EU Directive 2011/7/EU Article 6(3), a creditor is entitled to obtain from the debtor “reasonable compensation for any recovery costs exceeding the fixed sum” — meaning that where a creditor’s actual external collection costs exceed EUR 40, those additional costs can also be recovered from the debtor, subject to the reasonableness test. In the Netherlands, the WIK codifies a specific sliding scale of extrajudicial collection costs recoverable from the debtor as a matter of statute. In Germany, the creditor’s attorney’s fees for the pre-litigation demand phase are recoverable from the debtor under §§286, 280 BGB in the amount established by the Rechtsanwaltsvergütungsgesetz (RVG). In the US, FDCPA §808(1) prohibits collection agencies from adding any amount not expressly authorised by the agreement creating the debt or permitted by law.
The practical consequence: a creditor placing a EUR 100,000 invoice with a collection agency should expect the agency’s demand to state EUR 100,000 principal + EUR 40 per invoice (fixed compensation) + accrued statutory interest to demand date + potentially further recovery costs under Article 6(3). All of these are the creditor’s entitlement against the debtor. The agency’s 15% contingency fee is paid by the creditor from the EUR 100,000 (and interest) recovered — not added to the debtor’s bill.
You know the debt is real. What you need now is someone on the ground in the right jurisdiction who can make it cost the debtor more to ignore it than to pay it. Contact Cosmopolite for a free case assessment. No win, no fee.
