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Partial Payments After Interest Claim

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14 years 3 months ago #76 by atelier38
Partial Payments After Interest Claim was created by atelier38
Hi, I hope somebody can help?

I am about to make a claim for interest and recovery costs of some outstanding invoices, some of which are partially paid and some have been outstanding in this state since November 2009 - all to the same customer.

My question is -

Is the interest calculation based upon the outstanding figure after the 30 day credit period, or the original invoice amount and
if partial payment/payments are received following the claim for interest but part of the capital sum remains unpaid does the same priniple for the amount of interest to charge per day apply, or should this be recalculated in light of the lower balance? (This seems very complicated but I cannot find clarification in the info I have been able to find)

Any help would be gratefully appreciated.

Thanks
Mark Shinkfield

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  • Philip Bird
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14 years 3 months ago #77 by Philip Bird
Replied by Philip Bird on topic Re:Partial Payments After Interest Claim
Interest continues to accrue on the debt until the debt is settled in full.


Paul Brown

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14 years 3 months ago #78 by atelier38
Replied by atelier38 on topic Re:Partial Payments After Interest Claim
Thanks Paul,

So am I right in thinking then - using this 'simplified' senario.
That an overdue invoice for £2150, which if 100 days overdue (£0.50x100=£50) =£2200 (I am ignoring recovery in this example)and the debtor sends a payment for £2000 by return. I should continue to add interest at £0.50/day until the debt is settled?

Or should I recalculate for remaining balance, which would be a daily interest charge of approx. £0.04. This could also lead to having to recalculate several times if several smaller payments are received at irregular intervals. I hope this is not the case as 50p/day is much more likely to result in payment than 4p/day.

Thanks again and apologies if I am failing to grasp a simple principle.

Mark Shinkfield

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14 years 3 months ago #82 by David J
Replied by David J on topic Re:Partial Payments After Interest Claim
Hello Mark

When a client makes a partial payment (or just pays the principal and not the interest or compensation) then that payment will pay off the interest and compensation first. This will leave an outstanding amount to pay on the principal.

So as Paul said, interest will continue to accrue at a daily rate based on the full amount of the principal until the complete debt (principal, interest and compensation) are paid in full.

So this example is correct.

So am I right in thinking then - using this 'simplified' senario.
That an overdue invoice for £2150, which if 100 days overdue (£0.50x100=£50) =£2200 (I am ignoring recovery in this example)and the debtor sends a payment for £2000 by return. I should continue to add interest at £0.50/day until the debt is settled?


In your example the client owes you:

Principal = £2150
Interest = £50
Compensation = £70
Total = £2,270

If the client pays you £2000.00, the interest and compensation are deducted first, leaving £270 unpaid on the principal. The daily interest rate still continues on the full amount (0.50p per day). You do not re-calculate the daily interest to the £270.00 outstanding.

I hope this is clear!

David

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14 years 3 months ago #83 by atelier38
Replied by atelier38 on topic Re:Partial Payments After Interest Claim
Thanks Paul and David for clarifying what I suspected but wanted to confirm before the debtor tries to tell me different!!

Thanks again

Mark Shinkfield

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14 years 3 months ago #87 by latepayments
Replied by latepayments on topic Re:Partial Payments After Interest Claim
Hi,
As being new to this forum could I ask for a little clarification on this topic:
1) Exactly which section of the Late Payment Legislation are you depending on for your answer that interest is based on the value of the original debt. As a lay person I looked at the Late Payment legislation but I could not find the section explaining the treatment of part payments.

2) In your example I assume the business customer had already received his Late Payment Claim Letter,how would the payment be allocated if no claims letter had been sent at the point the part payment was received?
.
Please clarify for me.

Many thanks

Edward Wilkins

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