Can you recover debt collection fees back from your debtor?

Collection costs can only be added to the debt if you have a signed agreement with the debtor or the debtor is aware of extra costs at the time the job is done if not paid on time. (i.e.) – By displaying a sign in your office or workshop.  

YOU CANNOT ADD COLLECTION COSTS TO THE INVOICE AFTER THE WORK HAS BEEN COMPLETED

A clause written on an invoice or account after the goods or services have been provided to your debtor is not enough to enable you to lawfully demand these extra costs.

What can you do?

 1.      Have a credit application form or your standard terms of trade (which contain the appropriate clauses) signed by your customer and give the customer a copy.

 2.      In the case of payment by cheque, have customers endorse the back of the cheque acknowledging that they understand they will be liable for collection costs should the cheque dishonour.

 3.      As a suggestion the following sign should be placed in a prominent position in your office and/or workshop or place of business where your customer is deemed to have seen it…