Part Payments

Hello Karl
Firstly good news that your client has agreed to pay interest and that your are helping them by being paid in installments. Maybe that way the business relationship can remain intact.

Regarding interest and compensation. The daily interest rate is set by the full amount of the invoice including VAT.

When your customer makes their first partial payment, interest and compensation are paid of first, the remainder reduces the invoice amount.

So if you have £2000.00 (including VAT) invoice and they pay £400.00

The result would look something like this:

Invoice total: £2000.00
Compensation: £70.00
Interest: £13.97 (as an example)

Client pays £400.00

Invoice total: £1683.97
Compensation £00.00
Interest £00.00

After this, the interest will continue to accrue at the same interest rate based on the invoice value of £2000.00.

So in 10 days you will have this

Invoice total: £1683.97
Compensation £00.00
Interest £4.66 (as an example)

Client pays another £400.00

Invoice total: £1288.63
Compensation £00.00
Interest £00.00

Complicated? Yes. And time consuming.

Our Advanced calculator has a partial payment feature built in and does all the hard work of re-calulating interest and total owed then generate supporting documentation for you and your client but that won't be ready for a couple of weeks.

In the mean time, if you know the client will pay the interest, it would be easier to wait until all payments are made, then calculate the interest owed on the time it took for the last payment to clear in your account. Alternatively, if you know when you will receive the final payment, make a claim now.

The client should be made aware though that the interest rate stays at the same daily rate based on the invoice total including VAT until the debt is paid on full.

I hope that helps

Regards

David