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Invoice Paid But Compensation Unpaid

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13 years 3 months ago #300 by Tony1208
Invoice Paid But Compensation Unpaid was created by Tony1208
Hi,

I am unsure if I am entitled to enforce my request for compensation when the debtor has since settled their invoice late.

CIRCUMSTANCES

I issued an invoice for £518 on 1st Nov.

By the 20th Nov the invoice had not been settled and so I sent a reminder asking it to be settled by 30th Nov else a late payment compensation fee of £40 and a daily interest rate would be applied.

The invoice was paid 5 days late on 5th December and the debtor blamed their bank so refused to pay the £40 late payment compensation fee.

REASONING

Whilst this may only seem a small amount, I feel compelled to stick to my guns and pursue the £40 for moral reasons (even though the invoice has now been paid) because I have had no end of problems with the debtor whilst delivering my service to them.

QUESTION

Whilst I appreciate that any reply will not constitute legal advice, can anyone offer any thoughts on this?

Can I legitimately pursue the £40?

Thanks

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13 years 3 months ago #305 by David J
Replied by David J on topic Re:Invoice Paid But Compensation Unpaid
Hello Tony

This happens a lot. A client receives a claim for interest and compensation and they just pay the principal.

When you receive payment, under the legislation the interest and compensation are taken into account first. If the client only pays the principal, then interest will continue to accrue at daily rate on the full invoice amount until paid.

This would be the same as receiving a partial payment. Interest continues to be calculated on the full amount of the debt.

it is of course up to you whether you want to pursue the outstanding interest and compensation. Effectively though, yes you can legitimately pursue the outstanding interest and £40.00 compensation.

Good Luck!

David

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12 years 9 months ago #457 by p3electrical@gmail.com
Replied by p3electrical@gmail.com on topic Re:Invoice Paid But Compensation Unpaid
Thanks also for the reply to the original question.I too have a similar story.
This morning I issued notice of my intention to charge for compensation and interest on a debt that was 27 days old.
Later today they paid the principle into the bank and ignored the £70 compensation and interest.
I too feel that I should persue this for moral reasons. I received all types of excuse for non payment and I feel they should pay.

I'll discuss with my partners to see if they feel the same.It's possible I have tunnel vision on this due to the time it has taken up chasing these people.

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12 years 9 months ago #460 by David J
Replied by David J on topic Re:Invoice Paid But Compensation Unpaid
Hello Gary

Well the same principal applies. Take the example below:

Total invoice amount = £1,000.00
Total days overdue: = 73 days
Interest rate used: = 8.5%
Daily interest rate: = £0.2329
Total Interest owed = £17.00
Compensation: = £70.00
Total owed to date: = £1,087.00

if a debtor just paid the principal and ignored the interest and compensation, the result would look like this.

Total invoice amount = £87.00
Total days overdue: = 73 days
Interest rate used: = 8.5%
Daily interest rate: = £0.2329
Total Interest owed = £00.00
Compensation: = £00.00
Total owed to date: = £87.00

In legal terms, compensation and interest are paid off first then the remainder pays off the principal. Because £87.00 remains unpaid on the principal, interest will continue to accrue at a daily rate on the original amount of the principal (£0.2329p per day).

After 1 year the amount owed will be:

Total invoice amount = £87.00
Total days overdue: = 438 days
Interest rate used: = 8.5%
Daily interest rate: = £0.2329
Total Interest owed = £85.01
Compensation: = £00.00
Total owed to date: = £172.01

As with Tony it is up to you whether you want to pursue the amount owed.


Regards

David

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