Debt collection in B2B vs. B2C: What are the legal differences?
An unpaid invoice is the nightmare of every entrepreneur. You have worked hard for your money, and it is frustrating when the client does not pay. Many entrepreneurs wonder when exactly they are allowed to engage a debt collection agency and which costs they may pass on.
What many people do not know, is that the difference between business and private collection is quite significant. The law protects consumers (B2C) much more strongly than businesses (B2B). In this article, it is explained exactly what the legal differences are, when you may charge collection costs, and how you do this without damaging the client relationship.
The most important difference between business and private collection
The rules for collecting outstanding invoices are laid down in the Collection Costs Act (WIK). The biggest difference lies in the way someone enters 'default'. A party must legally be in default before you are allowed to charge collection costs.
The rules for consumers (B2C)
If you supply products or services to consumers (private individuals), your client is heavily protected. Has the invoice payment term expired? Then you are not allowed to charge collection costs immediately. You are legally required to first send a so-called 14-day letter (also known as a WIK letter).
In this letter, you must give the consumer exactly 14 days to pay, without any extra costs. You must also state exactly how high the collection costs will be if they do pay late. Only when these 14 days (after receipt of the letter) have passed, is the consumer in default.
The rules for businesses (B2B)
Different rules apply to business clients. Businesses are expected to be familiar with the law and the contracts they enter into. Thus, potential default takes effect immediately as soon as the invoice payment term has expired.
This means that for a business debtor, you do not legally need to send a 14-day letter or formal notice (unless you have agreed otherwise in your General Terms and Conditions). You could charge the statutory collection costs immediately.
Calculating statutory B2B collection costs: How much are you allowed to charge?
Whether you supply B2B or B2C, the minimum collection costs are always €40. On top of that, the amount is calculated as a percentage of the outstanding principal sum (invoice amount). For B2B, you also have the option to deviate from the standard statutory percentages in your General Terms and Conditions, provided this is reasonable. If you have not agreed on anything, the standard statutory scale applies.
Tip! Are you not sure what amount you may pass on? Use our handy Collection Costs Calculator to calculate the exact collection costs for your invoice within 10 seconds.
Why charging collection costs immediately is not always smart
Although you are within your rights to charge costs immediately as soon as an invoice becomes overdue for business clients, we at incasso.nl always recommend a tactical approach.
A late payment is not always an act of malice. Sometimes an invoice has simply escaped attention, the contact person is on vacation, or there is an internal misunderstanding at your client's office. Going in aggressively by charging collection costs immediately could seriously damage your relationship with the client. It is often a better idea to send a (friendly) reminder first.
Does the client not respond to that? Then you can tighten the reins and start a collection process.
Outsource your B2B or B2C collection worry-free
Many entrepreneurs find it difficult to point out an unpaid invoice to a client. Furthermore, you can likely spend the time you lose on non-payers much better elsewhere. That is why it is a good idea to outsource your collection process. A professional collection partner like incasso.nl is specialized in collecting invoices from both private and business clients.
With the app from incasso.nl, you can easily take a photo of your invoice and start a collection process within 3 minutes.
