Obtaining Interest on Invoices
Kegler Brown Construction Newsletter February 1, 1998
Many subcontractors and suppliers attempt to collect 18% interest (or some other rate of interest higher than Ohio's statutory rate of 10%) by including a provision in their invoices to that effect. An Ohio Court of Appeals has recently held that such a provision in the supplier's invoice, unsigned by the other party, is inadequate to allow the supplier to collect 18% interest or an equivalent "service charge." Yager Materials, Inc. v. Marietta Indus. Ent., Inc. (1996), 116 Ohio App. 3d 233.
The Court found that no greater rate than 10% could be charged absent a written contract agreed to by both parties. Therefore, if subcontractors or suppliers want to collect a higher rate of interest or service charge on past due amounts, then they need to have their customer sign a contract, such as a subcontract, purchase order or credit application agreeing to pay this higher rate of interest. Subcontractors or suppliers who choose not to do so will likely be limited to interest at the 10% rate.