Collect Interest on Unpaid Accounts? Laws Vary from State To State
In all 50 states in the US, there is some type of pre-judgment interest allowed on commercial transactions.
With each state determining its rates on credit sales, you may see some rates as low as 5% up to any previously agreed upon rate.
In simplest terms, there are 4 types of interest rates pertaining to commercial debt.
LEGAL: a default rate applied in the event that there is no pre-signed contract
CONTRACTUAL: specific to the respective agreed upon contract
JUDGMENT: applied to an unpaid judgment, paid out only from the date of the judgment up to the date paid
CORPORATE: applied only to B2B transactions
Many states require a signed agreement for any legal action to take place. A number of documents can serve this purpose like a sales contract, a credit application or a new customer account card. The document must state the amount of interest (according to each respective governing state) and when the charges will begin to accrue. When the customer signs the document, it becomes a legal contract.
NOTE: Laws vary from state to state if an agency can pursue interest even if it is in writing.