What does debt collection in the Netherlands cost?
Almost every client asks this first, and rightly so. Proceedings that cost more than they recover are not a victory. Here is what you pay up front, what you can claim back, and what is realistically left.
The out of court stage
This is the stage of formal demands and negotiation, before any court is involved. Dutch law allows you to claim not only the principal sum but also collection costs and statutory commercial interest.
Out of court collection costs follow a statutory scale: fifteen per cent over the first tranche, with declining percentages above that. For a commercial claim there is a statutory minimum. Where the debtor is a consumer, stricter rules apply and a specific fourteen day notice must be sent first.
Statutory commercial interest is considerably higher than ordinary statutory interest and runs automatically from the moment the payment term expires. You do not need to have agreed anything for that.
With me this stage runs on a no cure no pay basis where the claim is an undisputed business claim. If the debtor pays, the debtor also pays the costs and you keep the principal in full.
The court stage
If the debtor does not pay, issuing a writ is the next step. Three cost items come with that.
Court fee. Paid in advance to the court. The amount depends on the size of your claim and on whether you are a company or an individual. If the claim is awarded, it is in principle charged to the debtor.
Bailiff costs. For serving the writ, and later for enforcing the judgment. These too are generally allocated to the debtor on an award.
Legal costs allowance. On an award the court grants a contribution towards your legal costs according to a fixed points scale. Note the word contribution: it is not full reimbursement. The gap between what you actually pay and what the court awards remains yours.
Why the sum often works out differently than expected
Two things consistently surprise clients. The first is that an awarded judgment is not yet money. If there is nothing to recover, you hold an expensive piece of paper. The second is that the costs order is rarely full cover on smaller claims, because the points scale does not scale with what you actually spend.
That is why I look at recourse first and at the merits second. The other way round is the order in which most money is lost.
What I tell you in advance
Before anything happens you get an assessment of the prospects of recovery, the expected duration, the costs you advance, and what realistically remains. I can often agree a fixed fee for the court stage so you are not surprised.
Frequently asked questions
Do I get all my costs back if I win?
No. Court fees and bailiff costs are in principle recovered, plus a contribution towards your lawyer’s fees under a fixed points scale. That contribution rarely covers your actual costs, certainly not on smaller claims.
What is the difference between statutory interest and commercial interest?
Statutory commercial interest applies between businesses and is considerably higher than the ordinary statutory interest that applies to consumers. Both run automatically once the payment term expires, so on business to business claims the interest mounts up much faster.
Do I have to send a demand first?
Where the debtor is a consumer, a correct fourteen day notice is mandatory before you may charge collection costs, and the requirements are strict. For a business debtor it is not mandatory, but it is sensible because it strengthens your file.
Can I recover the cost of my own time?
In principle no. Internal hours spent on credit control fall under ordinary business operations and are deemed to be covered by the collection costs. That is precisely why outsourcing is often cheaper than it looks.
Curious what your matter would cost?
Put it to me. You get an assessment of the costs and of what remains at the end, before you decide anything.