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International Debt Recovery
We can recover overdue invoices from businesses based in the United Kingdom, North America and EU.Empowering International Trade
Jurisdictional Flexibility in International Invoicing
Our platform enables the user to choose the trading currency of each invoice and in which jurisdiction the invoice became due i.e. if the principle place of business was in the UK then the invoice would be based under UK business law – a rule known as the ‘significant connection test.’This essentially gives businesses some degree of protection when trading goods and services internationally with some companies deliberately routing their business transactions via a particular jurisdiction with stringent trading law protections so that they can reap the benefit.
Regulation Protection
Alignment of Payment Protections in UK and EU Commercial Debt Regulations
Regardless, the UK Late Payment Commercial Debt Regulations 2013 and EU Prompt Payment Act are both similarly aligned thus granting businesses the same level of protection. For instance, companies can claim a compensation fee, reasonable admin fee and Interest. The only 2 differences being that Interest for UK companies is calculated based on the Bank of England Reference Rate whereas EU based companies calculate it based on European Central Bank Interest, and the currency.State-Level Variations in Late Payment Charges for US Businesses
In the US companies have a choice whether they charge and flat late fee or Interest although unlike the UK and EU there is no specific Government framework which sets out the Terms over what a business can charge. Instead this is done at a State Level and differs per jurisdiction (see table below).
| 🇬🇧 United Kingdom | 🇪🇺 Europe | 🇺🇸 United States | |
|---|---|---|---|
| Statutory | ✅ Late Payment Commercial Debt Regulations 2013 | ✅ EU Late Payment Directive | ❌ Pre-agreed Late Payment Policy |
| Compensation / Late (fixed) fee | £40 not exceeding £1000 £70 not exceeding £10,000 £100 exceeding £10,000 | £40 not exceeding £1000 £70 not exceeding £10,000 £100 exceeding £10,000 | Typically $25 - $50 per month |
| Interest | 8% + Bank of England base rate* | 8% + European Central Bank base rate* | 1% - 2% per month |
| Debt Recovery Costs | ✅ Reasonable recovery cost | ✅ Reasonable reocvery cost | N/A |
US Late payments
Monthly Rates and Compounding Practices
Interest is worked out based on the outstanding balance which differs to the UK which is instead based on the whole original amount. It is also standard practice for US companies to charge around 2% monthly Interest on an overdue Invoice which is more than what EU And UK Legislation permits. Interest also compounds at a much faster rate for US Debtors too – for instance let’s say a Bakery is chasing an overdue Invoice of $1000 which has gone beyond 30 days. They decide to add 2% monthly Interest which means the Debtor now owes $1020. If this debt remains unpaid then the Bakery would add another 2% to the balance which is $1020 meaning the new balance would be $1,040.40. This would simply accumulate until the balance was paid.
Interest Calculation Contrasts
Analysis of US, UK, and EU Late Payment Regulations
This differs from UK and EU Legislation which states Interest is charged on the whole original balance. So if in this case the Bakery was based in the UK then they would simply charge Interest on £1000 and add the daily accruing amount to the balance E.g. £1000 divide by 100 x the Bank of England Reference Rate 5.25% + 8% = 13.25 x 100 = £132.50 / 365 (days per year) = 0.36 per day. This would then be added to the £1000 Invoice amount and accrue on a daily basis until paid. Based on this example you can see that after 30 days The UK Invoice would stand at £1,010.89 including Interest whereas the US Invoice would stand at $1020.However, UK And EU based businesses can also charge a reasonable admin fee and fixed compensation fee which would increase the overall balance due.Late Fees in the US
Flat Rates, State Caps, and Business Considerations
The other option is for US based business to charge a standard flat rate Late fee although this is often capped as a certain percentage of the original overdue balance depending on which State the business transaction was done (refer to table). This also means late fees cannot compound so the fee each month remains the same hence why most companies tend to opt for Interest instead. For example, the same Bakery may opt to charge a flat $50 dollars per month therefore each month the $1000 overdue invoice increases by another $50. This may be more beneficial for smaller amounts but some States do limit the Late fee amount meaning that Interest can sometimes be more lucrative.
Legal Frameworks
Grace Periods and Late Payment Policies in US
It is also important to note that many States require minimum Grace Periods (usually between 7-14 days) before you can legally charge late fees or Interest. And there does need to be a Late Payment Policy or Contract in place for business-to-business transactions in the US in order to legally enforce late fees otherwise a Debtor is not required to pay fees. This differs from UK and EU based businesses however as Late fees can be imposed on a statutory basis.Late Fee Management
AI-Driven Invoice Analysis and International Legal Practices
Our integrated AI tool automatically scans each invoice and calculates how much Interest can be charged based on which jurisdiction the Invoice was raised. This ensure that you always charge the correct late fees to the Debtor. The currency can also be adjusted based on the Dollar, Pound or Euro too and our free Interest tracker tool automatically adjusts to a rise or fall in the Central Bank Interest Rate. We have over 30 partnerships with legal representatives from Countries in North America and Europe so we can always ensure the correct legal recovery method is undertaken to give us the best chance of making a successful claim.
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Tired of chasing persistently late invoice payers?
We help businesses retrieve late fees arising from overdue and unpaid B2B invoices and implement effective credit control measures to get you paid on time.
We help businesses retrieve late fees arising from overdue and unpaid B2B invoices and implement effective credit control measures to get you paid on time.
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