Late payment of commercial debts calculator

Interest and compensation

Information in tinted fields is required. The program tries to calculate as you go along: it should flag suggested values in cyan. Hitting the [SHOW CALCULATION] button gives explanations and displays the interest calculation in a pop-up window (if your web browser program allows it to do all that).

Union members having difficulty persuading a client to pay up should see the Collect-o-matic! form.

1 Really detailed contracts specify a "jurisdiction" - the country where you agree to go to court. This also decides whether you can claim interest and debt recovery cost compensation, and how much. As a rule of thumb, unless otherwise specified in a contract the jurisdiction is the country your client operates in.

Note: France and Germany are included for testing purposes only. I haven't been able to work out whether they have implemented the compensation that an EU Directive mandates.

If you find a problem or a solution, please tell me about it.

2 Under EU regulations effective from August 2002, payment is due 30 days after your client became aware of how much they owed you, or after you delivered or did the work, whichever is the later. But this rule is overriden if you agreed a different due date when you took the work on. (See examples)

If payment is delayed beyond this date interest is payable at a penalty rate, plus compensation for debt recovery costs. See Late payers, your time is up for more details. In the UK the Late Payment of Commercial Debts (Interest) Act 1998 allows you to claim interest, but no compensation, on contracts made after 01/11/1998 - though Small and Medium Enterprises (SMEs) were exempt up to 01/11/2000. After filling in the relevant dates and amounts, click [SHOW CALCULATION] to get a detailed account of the interest and compensation.

So the EU backs up the NUJ's longstanding advice that the payment clock should start ticking as soon as the work is delivered. Publishers want to count from publication, which is one reason they set up so-called "self-billing" systems. The regulations authorise your union to act on your behalf against clients trying to impose contracts that circumvent the penalties. If you are an NUJ member and think you have been "offered" such a contract, contact the Freelance Office.

3 The NUJ recommends that when work has been commissioned and carried out satisfactorily according to the brief, it should be paid for in full. If publishers over-commission or change their minds, that should be their problem. Many publishers, however, offer "kill fees" of 50% to 67% in the hope you'll accept that, shut up and go away. Your having read this far may suggest otherwise.

4 Repeating some of Note 2 in more normal English... usually there is one of two stories to tell. Either:

• On 24/03/2012 you agree to do a piece of work - and you agree then and there how much you will be paid. You deliver the work, as agreed, on time, on 28/03/2012. So the clock starts ticking on this, the second date. The payment is overdue 30 days later, which is 27/04/2012. Or:
• On 24/03/2012 you agree to do a piece of work - and, say, you agree that you'll let your client know later on what the expenses are. You deliver the work, as agreed, on time, on 28/03/2012. But this time the clock doesn't start ticking until the client knows formally how much they owe. On Saturday 15/04/2012 you get around to invoicing for the work and expenses. Allowing the usual two working days for the post, your client is aware how much they owe you on the Wednesday, 18/04/2005. The payment is overdue 30 days after that, which is 18/05/2012.

Note that though this program knows about weekends, it doesn't know about state holidays. If the due date is counted from the date on which you sent an invoice, please adjust it if necessary.

So why do you need to tell this program when you agreed to do the work, when both stories seem to ignore this date? Because it determines which late payment regulations, if any, apply.

And remember that both these stories assume that your client didn't persuade you to agree some other payment terms, or vice versa.