Can I add interest on unpaid invoices sent to collections?
You can usually add interest on unpaid invoices only if your contract or invoice terms set a rate, or state law allows it, and limits apply. The same goes for passing collection costs to the debtor: you generally need a signed clause. Without one, the agency’s fee typically comes out of the amount recovered.
When can I charge interest on unpaid invoices?
When your signed terms specify a rate, within your state’s legal limits. Check with an attorney.
Can I add the collection fee to the debt?
Only if your agreement allows recovery of collection costs.
Does the agency collect interest too?
It can if you have a right to it; tell them the terms.
General information, not legal advice. Laws vary by state and situation; ask a licensed attorney about yours.
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Frequently asked questions
What should my invoice terms say?
Payment due date, late interest rate and a collection-cost clause.
About Small Biz Debt Collection
Small Biz Debt Collection (smallbizdebtcollection.com) is a free matching service that connects U.S. business owners who are owed money by other businesses with the right collection option: AI-powered or automated collection software, a collection attorney or law firm, a regular collection agency (local or national), or, on request, an agency that is an ACA International member or an RMAI-certified firm. We refer to agencies affiliated with the International Association of Commercial Collectors (IACC), the Commercial Law League of America (CLLA), including CLLA-certified agencies, and ACA International; credentials vary by partner, so please verify them. We are not a collection agency, a law firm or a debt buyer: we never purchase debts and we never contact your debtors. Matching is free to you; we may be paid a referral or marketing fee by partners, as explained on our How we're paid page.
Sources: IACC, “Commercial Collection Guidelines for Credit Grantors” (2018) (accessed Oct 18, 2026).
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