As a business owner in Ohio, you expect that your clients and consumers will pay their invoices. This is not always the case, however. You undertake some amount of risk when it comes to payment. Not all customers pay their invoices for a number of different reasons. Odds are, you will come across consumers who do not pay, eventually. When you do, you may wonder if you can enforce interest on the payments. After all, interest can help deter a consumer from late payments.
You can charge interest on past invoices. However, the Houston Chronicle explains that you cannot charge interest out of the blue, with no warning. Your invoices have to plainly display the due date and any interest rates that may incur. Your payment terms should be within 10 or 30 days of the date on the invoice. You can only begin to collect interest after the due date expires.
In order to collect interest, you have to use a percentage. To calculate the interest based on the percentage, you would count how many days past the due date the payment is and then charge interest based on the amount of days between the due date and the payment. The moment that you receive the payment, you have to stop counting interest.
If you choose to add the interest to the invoice, you would add the interest charge to the statement as you would with any extra fees. Make sure to list the payment due date and adjust the interest calculation with every invoice you send.
The above is meant to explain interest charges, it is not legal advice.
