What you'll do
- Establish the correct principal balance
- Account for part-payments and credits
- Separate the principal from interest and costs
- Use tools to keep the maths accurate
- Present a total you can stand behind
6 min
Start with the principal
The principal is the core amount owed for goods or services before any interest or recovery costs. Add up every unpaid invoice for the debtor, then subtract any payments and credit notes already applied. The figure left is your starting balance, and it must be accurate to the cent.
Build the total step by step
- List every unpaid invoice with its amount and due date.
- Add them together to get the gross amount.
- Subtract any part-payments received.
- Subtract any credit notes or agreed discounts.
- Note the net principal clearly.
- Keep interest and recovery costs as separate lines, not mixed in.
Keeping the principal clean and separate makes the whole claim easier to explain.
Use the right tools
The Merion tools can help you tally invoices and keep a tidy running total. Once you know the figure, you can decide whether to add interest and costs in a separate step, then refer the debt at merion.com.au/refer-a-debt with confidence in your numbers.
Good to know
- The principal is the core amount before interest and costs
- Always subtract part-payments and credits to reach the net figure
- Keep interest and costs on separate lines from the principal
FAQ
What is the difference between principal and total owed?
The principal is the core amount for goods or services. The total owed may also include interest and recovery costs, kept separate.
Should I include interest in the principal?
No. Keep interest as a separate line so the core debt and any add-ons are clear and easy to explain.
How do I handle part-payments?
Subtract them from the gross amount before you finalise the principal, and note the date and amount of each payment.
Still not sure? Our team is happy to talk it through.