Even small debts can grow quickly due to various fees for reminders and payment demands. The best way to avoid that is, of course, to make sure you know when payment is due and to pay in time.
Forgetting about bills or perhaps just letting them lie unopened because of some temporary financial restraints can prove to be a very costly mistake. Smaller bills can easily double in size if they are not paid on time.
One example could be that pair of nice sneakers you ordered on the spur of the moment on the internet. They appear a bargain at just EUR 30 but that will only hold true if they are paid for on time.
Although regulated, what happens if payment is not received on time, differs from country to country. As does the costs and fees associated with it. When it comes to late payments between businesses the fees are more tightly regulated by European Union legislation. The following chain of events relates to an example from Sweden.
First, a reminder fee of EUR 6 (SEK 60) may be levied and if a payment demand needs to be sent out, a further EUR 18 (SEK 180) will be added. That means the initial debt has jumped 80 percent from EUR 30 (SEK 300) to EUR 54 (SEK 540). Not such a bargain any longer.
If the debt is still not paid it may be sent to the Swedish Enforcement Authority who will send an injunction to pay and this will typically incur a fee of a further EUR 68 (SEK 680), bringing the total amount to pay to EUR 122 (SEK 1220) or more than four times the original amount. These charges relate to Sweden but fees are levied across Europe although they may differ from country to country. When it comes to late payments between businesses the fees are regulated by European Union legislation.
If you fail to pay even after legal measures are taken you are likely to be registered as a defaulting payer which can lead to problems in getting credits or renting apartments.
“Today it’s very easy to get tempted to do an unplanned purchase online as it is just one click away and you take on a credit that might cost a lot more than the original price. The absolutely best thing of course is to pay in time but if you do happen to be late and perhaps get a reminder, make sure to pay as quickly as possible so it does not escalate,” says Roger Liljeström, Head of Legal and Compliance at Intrum Justitia.fick