An unpaid invoice is an interest-free loan to your customer. If your terms allow it, work out the interest a late payment has earned — and what it’s really costing you.
traqR sends automatic payment reminders before and after the due date and can apply your late-payment terms — so most invoices get paid before interest ever comes up.
Start free trialYour annual interest rate divided by 365 is the daily rate. At 10% p.a. that’s about 0.0274% a day — small per day, but it adds up.
Daily interest is the invoice amount times the daily rate. Multiply that by the number of days overdue to get the interest owed.
The interest is added to the original balance. Charging it (or just showing it) makes clear that paying late has a real cost.
Yes — if the right to charge interest, and the rate, is set out in your agreed terms of trade or contract before the work is done. You can’t simply invent an interest charge after the fact. Put a clear late-payment clause in your quotes and terms so the right exists when you need it.
Whatever you’ve set in your terms, provided it’s not so high it becomes a penalty a court won’t enforce. Many trades peg it to a commercial benchmark — often around 10% p.a., similar to the state penalty-interest rates courts apply to judgment debts. Keep it reasonable and defensible.
This calculator uses simple interest (interest on the original amount only), which is the fairest and most common approach for overdue invoices. Compounding is harder to justify and more likely to be challenged. If your terms specify a method, follow that.
Either can work if it’s in your terms. A flat administrative fee is simple; interest scales with how late the payment is. Many businesses lead with reminders and only raise interest as a last resort — the goal is getting paid and keeping the customer, not the interest itself.
This calculator is a general guide, not legal or financial advice. Your right to charge interest depends on your contract and applicable law, and unreasonable rates may be unenforceable. Get advice before pursuing interest or debt recovery.
traqR chases every invoice automatically with reminders before and after the due date — so far fewer ever reach the interest stage. Try it free for 14 days.