A simple case study - Collecting late payment

Ok, I'm going to work through a very simple example on collecting late payment fees.

I have 3 outstanding invoices from the same customer, who just won't pay dispite reminders, telephone calls etc. Our terms are 30 days, which is printed on all our invoices.

1st Invoice 5th May 2010 - £415.95
2nd Invoice 27th May 2010 - £ 65.80
3rd Invoice 8th August 2010 - £ 51.11

As the interest rate has'nt changed for a while the rate I will use is 8.5% APR. I'm not going to work the rate out on this case per day, but per month. Per day would be better.

Invoice 1 - overdue 8 months
Invoice 2 - overdue 7 months
Invoice 3 - overdue 4 months

Therefore

Invoice 1 - Interest Per A =£ 35.36 = Interest claimed = £23.57
Invoice 2 - Interest Per A =£ £5.59 =
Interest claimed = £3.29
Invoice 3 - Interest Per A = £ 4.34 =
Interest claimed = £ 1.44

Total Interest due to me £28.30
Total compensation due is it £40 or £40 per Invoice ? I'm going to go for £40 per Invoice.
Total compensation due is £120

My claim is Principle debt £532.86
Interest £ 28.30
Compensation £ 120
Total now due = £681.16
Plus my small claims fee.

I will submit today a small claims application on-line.

In this case, just for ease of use.

Daily interest would be correct. I doubt that on these small sums there will not be much real difference between daily or monthly. As you will see the bigger figure is the compensation.

Remember what the compensation is for - to teach the debtor that it is better to pay on time, I doubt very much that paying the interest only would have any real effect to get the debtor to payontime. It wouldnt even be worth my time chasing it, hence the need for compensation.

I guess that when the court papers arrive with the debtor, perhaps some further discussions will have to take place, prior to settlement. At which stage then I will look at the daily interest and any other issues they might try to raise.

Main thing, is to get the court papers delivered.

Well, I decided before I sent the claim to have one last go at calling the debtor to ask for my money.

He started to dispute he firstly didnt order some of the goods, I had his order, I had the POD's for the deliveries, so 9 months later he decides he wishes to dispute what he had received, what a joke. ( not to mention the items he said he didnt order, were not supplied by me, nor on my invoices ) My invoices where correct. I also gave him the option to return the complete order, but guess he couldnt as he had used all the products supplied, which he was refusing to pay for.

He proceeded to make me an offer of £300 to settle the matter, another joke. Why on earth would I accept a lesser amount than I was owed, and could prove that it was owed.

I gave him an opportunity to settle the debt, he refused, saying he could'nt confirm the products received, because staff had changed, and he could not verify he had received the complete order, ( not my problem ) and I could either accept his offer or let the debt lapse.

So in went the small claims, including court costs my claim is now over £700.

I guess it will take 6 or 8 weeks for a court date, will keep you posted.

I dont think I could have been any fairer, but still it didnt make any difference.

.

Got my papers back from the small claims. Posted them last Friday. Says ' if the respondent has not paid the amount owed, including the court fee, by the 13 April 2011 you may apply for a default decree by completing the attached Application for Default Decree form '
Guess we will wait now and see how the process works, and what the respondent says to delay the process.

So I guess the first step takes 6 weeks, but that doesnt mean I will get paid yet.