Setting Suitable Contractual Interest Rates
Video 10 of 11 in our series discussing issues relating to private school debt.
As part of a debt recovery process, we as debt collectors will add on all third-party collection costs as well as any contractual late payment interest owed to our client, to maximise the returns and to ensure, wherever is possible, that our fees are paid by the errant party.
It is imperative that the contractual interest rates set in your terms and conditions, is regarded as a penalty. We would recommend 2% per month. If the contractual interest rate is set at a lower level, this will encourage defaults on payments.
A lot of private schools and businesses fail to charge any interest at all to a late paying party. And therefore, in essence, are providing cheap credit. It is important to remember, that you do not genuinely offer credit because you are not a bank or financial institution. If your rates of interests are the same or lower than a bank, then you are likely to have more balances outstanding as a result.
Here at Town and Country Legal Services, we work on a no-collection, no-commission basis, and we are here to help you. If you would like to find out more about our extensive experience working alongside schools like yours, or to see if we could be of help to you, please give us a call on 01883 212121 or email enquiries@tclsllp.com. We are also providing much of our support over virtual zoom meetings and there's absolutely no cost for doing that. It is all part of our service to you.