Clients are notified of entitlements to forthcoming dividend and interest income in a timely manner. The rate of income per security is made known to clients promptly after announcement by the issuer or its paying agent.
Clients are pre-advised of the amount of cash expected once the relevant securities position can be determined with certainty and confirmed in each of the last few business days preceding the pay date.
This is a cash management tool: dividends and interest payments are applied to the client's cash account on the due payment date (or, for some markets where inefficiencies cannot be overcome to allow earlier collection of dividends and/or interest, according to a pre-determined schedule of pay-date plus n days - eg. PD+2 - with the value of n varying according to the market) in place of when the income is actually received. This can greatly assist clients in managing available funds.
The late receipt of dividend and interest income typically gives rise to indirect costs (such as the loss of interest on funds). Many markets have an established mechanism for making a claim (a 'market claim') so that the owner receives compensation for some of the associated costs. The service provider makes these market claims and actively pursues unpaid claims.