If a customer fails to pay an invoice by the due date, you can send a reminder or a debt collection notice.
It is important to have good procedures for the recovery of outstanding claims. It makes no difference how much we sell if the customers fail to pay. At the same time, it is also useful to be familiar with the customer's rights in connection with payment reminders.
VAT must NOT be calculated on reminder fees.
Reminders can be sent once the original invoice has fallen due for payment. If you wish to charge a reminder fee, however, you must comply with the provisions of the Debt Collection Regulations. The Regulations entitle the creditor to charge a reminder fee once a written reminder has been sent, no earlier than two weeks after the original due date. The reminder must also have a deadline for payment of at least two weeks.
You can send as many payment reminders as you like, but you can only charge a certain number of reminder fees.
Reminder fees can be charged for either two reminders or one reminder and one debt collection notice. The reminder fee can be a maximum of one tenth of the applicable debt collection rate. The debt collection rates are defined annually in Regulations to the Debt Collection Act etc.
As of 1 January 2014 the maximum reminder fee is NOK 64.
Sending payment reminders is not mandatory pursuant to the Debt Collection Act. However, you are required to sent a debt collection notice before the case can be transferred for debt collection.
Certain provisions of the Debt Collection Act can be waived if both parties are businesses, see Section 3 of the Debt Collection Act concerning deviation from the provisions of the Act.
Debt collection notice
Before an invoice can be sent for debt collection, the creditor or debt collector must send a debt collection notice.
You can choose whether to send a payment reminder followed by a debt collection notice or only send a debt collection notice two weeks after the invoice fell due for payment.
The debt collection notice must clearly marked as a debt collection notice, and the deadline for payment must be at least two weeks. It must also state what the claim concerns and the amount of the claim.
As of 1 January 2014 the maximum reminder fee is NOK 64.
The maximum rate for reminder fees/debt collection fees can be deviated from by agreement between the creditor and debtor. Nevertheless, the fees charged cannot exceed the actual costs of the reminder/debt collection.
Disputed claims cannot be sent for debt collection. You cannot therefore send a debt collection notice for such a claim. If a debtor files a complaint about an article of goods/service, the claim is deemed to be disputed. Objections can be made both verbally and in writing. It is up to the creditor to assess whether the objection is well-founded or not. The threshold for when out-of-court collection from a debtor must be discontinued and the case brought before a conciliation board is relatively low.
If the customer fails to pay within two weeks after the debt collection notice was sent, the seller can initiate debt collection. You can choose to do this yourself or leave it to a debt collection firm or a lawyer. It is important to note that the Debt Collection Act applies both when others collect a debt on your behalf and when you yourself collect the money owed to you. Several of the provisions of the Act only apply to 'debt collection' (defined in Section 2), i.e. commercial collection of monetary claims on behalf of others, and buying overdue monetary claims and collecting them on one's own behalf. Each section states whether it applies generally to all recovery of overdue claims or just to 'debt collection',
Collecting debt on your own behalf
You can charge debt collection fees, but if you collect your outstanding claims yourself you can charge a maximum of twice the reminder fee for the reminder/debt collection notice plus three times the reminder fee for the payment demand.
Once a claim has been sent for debt collection, a demand for payment is issued. The payment demand cannot be sent until two weeks after the notice of debt collection was sent, and it must state a deadline for payment of at least two weeks.
The payment demand must include:
- The name of the creditor
- What the claim concerns
- The size of the claim and specification of the principal amount and the amounts of additional claims (interest, fees etc.)
- Rate for any interest on overdue payment and time of calculation
- The consequences of non-payment
- The right to demand that the matter be considered by a mediation body (if the debtor is a consumer).
Enterprises that collect their own debts can claim a maximum fee of three tenths of the debt collection rate. As of 1 January 2014 the maximum reminder fee is NOK 192.
Only three fees can be charged for one claim, either for two reminders and one payment demand or for one reminder, one notice of debt collection and one payment demand.
If a payment demand is sent in connection with debt collection on behalf of others, what can be claimed from the debtor is regulated by Chapter 2 of the Debt Collection Regulations.
In the event of overdue payment from customers, you can charge interest on the claim. The law states that interest starts to accrue from the due date if one is stated. If no due date is stated, the interest will start to accrue one month after the seller has sent the debtor a written payment demand.
The interest rate is stipulated every six months with effect from 1 January and 1 July. The Ministry of Finance has set the interest on overdue payments for 2014 at 9.5% per year from 1 January to 30 June (9.5% from 1 July to 31 December 2013).
The same rate applies to consumers and businesses unless otherwise agreed.
When the customer is a business or a public authority, the creditor can in addition claim a standard compensation for collection cost of NOK 320 (cf. Act regarding Overdue Payments Section 3a and Regulation regarding Overdue Payments Section 2).