Charging interest on overdue invoices
Late payment is one of the biggest cash-flow headaches for small businesses, and charging interest on overdue invoices is a legitimate way to discourage it and to compensate you for being kept out of your money. This calculator works out the interest owed on an unpaid invoice from three inputs: the outstanding amount, the annual interest rate you are applying, and the number of days the payment is late.
The maths is simple daily-interest: the annual rate is converted to a daily rate, multiplied by the number of days overdue, and applied to the outstanding balance. If a 10,000 invoice is 45 days late at a 12% annual rate, the interest is 10,000 × 12% × (45 ÷ 365) ≈ 148. The tool shows the interest accrued and the new total due, so you can add it to a reminder or a restated invoice with confidence.
Whether and how much you can charge depends on your agreement and local law. The strongest position is to state your late-payment terms clearly on every quote and invoice — the rate, when it starts to accrue, and any fixed late fee — so the charge is expected rather than a surprise. Some jurisdictions also set statutory late-payment interest rates for business-to-business debts; check what applies where you trade.
Interest is a tool for prompt payment, not a profit centre, so apply it consistently and communicate early. Tallium sends automatic payment reminders before and after the due date and can apply your late-payment terms, so overdue invoices chase themselves and the interest is calculated for you.
Frequently asked questions
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