Late payment interest calculator (simple interest)
Work out the interest on an overdue invoice: amount × annual rate × days late ÷ 365. You enter the rate, ideally the one written in your payment terms.
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Before you charge interest
- Put it in your terms first. Generally you can only add interest to a late invoice if the customer agreed to it beforehand, for example in your quote, contract or written terms of trade. Adding a charge after the event that the customer never agreed to is likely to start an argument, not get you paid.
- State the rate and how it's worked out, e.g. “Interest of 10% a year, calculated daily, applies to amounts unpaid after the due date.”
- Use it as leverage, gently. Many sole traders mention interest in the second or third reminder and waive it if the invoice is paid within 7 days. Our reminder email generator writes those emails.
- If a dispute goes to court or a tribunal, the court can award interest under its own rules, which may differ from your terms.
Penalty interest rates by state: information only
People often ask what the “official” late payment rate is. There isn't a single national rate for invoices between businesses. What exists:
| State / territory | What applies |
|---|---|
| Victoria | The Penalty Interest Rates Act 1983 (Vic). The Attorney-General fixes the rate; it has been 10% a year since 1 February 2017. It applies to civil judgment debts and court orders, and many Victorian contracts refer to it as their default interest rate. |
| NSW, Queensland, WA, SA, Tasmania, ACT, NT | No Act by that name. Interest on judgment debts (and interest a court may add before judgment) is set under each jurisdiction's court rules or legislation and is updated from time to time. Check the relevant court's website for the current figure. |
None of these rates automatically applies to your invoice. They're useful as a reference point when you choose the rate for your terms.
Sources (checked 17 Oct 2026): Department of Justice and Community Safety Victoria, Penalties and values (penalty interest rate fixed at 10% from 1 Feb 2017 under s 2 of the Act); Supreme Court of Victoria, Penalty interest rates; Penalty Interest Rates Act 1983; ASBFEO dispute help by state.
General information, not legal or tax advice. Whether you can charge interest depends on your agreement with the customer. For a real dispute, talk to your state's small business commissioner, a community legal centre or a lawyer.