LATE PAYMENT TOOL • VISUAL GUIDE

Reminder Timing and Interest Accrual

A practical guide to using the calculation date carefully when sending polite reminders, firm reminders and final notices for overdue business invoices.

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WHY IT MATTERS

Interest may increase as more days pass

Late-payment interest is usually calculated using the unpaid amount, the annual interest rate and the number of days overdue.

If several days pass between reminders, the number of overdue days may increase. That means the interest estimate and total recoverable amount may also increase.

Practical rule: Before copying a follow-up letter, update the calculation date to the date you plan to send that letter.

REMINDER FLOW

From reminder to final notice

The tone of the letter may change over time, but the calculation date should also be reviewed before each message is sent.

Polite reminder

Shortly after the invoice becomes overdue

Use the calculation date that matches the day you are sending the first reminder.

Firm reminder

After time has passed without payment

Update the calculation date before copying the next letter. The number of overdue days may have increased.

Final notice

Before taking further recovery action

Recalculate again so the interest estimate and total recoverable amount are current.

EXAMPLE TIMELINE

How the calculation date moves

1 July

Invoice due

Payment has not been received by the agreed due date.

8 July

Polite reminder

Calculate using 8 July as the calculation date.

15 July

Firm reminder

Update the calculation date to 15 July before copying the next letter.

22 July

Final notice

Recalculate again before sending a stronger final notice.

KEY DISTINCTION

The due date and calculation date are different

Due date When payment should have been made

This is normally based on the invoice terms, contract or agreed payment period.

Calculation date The date you are calculating up to

This should usually match the day you are preparing or sending the reminder.

CAUTION

Use current figures and check the contract

The interest figure depends on the rate used, the amount outstanding and the dates entered. The Late Payment Tool asks for the annual rate manually so that users can check the rate they intend to apply.

Contract terms may affect whether statutory interest should be used, so the output should be checked before being relied on.

Remember: This guide is general information only and should not be treated as financial, tax, accounting or legal advice.

USE THE TOOL

Recalculate before sending the next reminder

Open the Late Payment Tool, update the calculation date and choose the letter tone that matches the stage of the reminder.

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