Late payment interest calculator: Calculate interest on an unpaid invoice

What is a past due invoice interest calculator?

A past due invoice interest calculator is a tool that determines the amount of interest accrued on overdue invoices. It helps businesses calculate the additional charges that can be applied to invoices that have not been paid within the agreed-upon timeframe. This calculation is crucial for recovering owed amounts and discouraging future late payments, ensuring businesses receive the full amount they are rightfully owed.

Why use this interest on overdue invoices calculator?

An interest calculator for overdue invoices is essential for businesses to:

• Recover the total amount owed, including interest, on late payments.
• Discourage late payments by enforcing penalties.
• Uphold contracts and ensure fair business practices.
• Maintain professionalism and positive customer relationships.
• Streamline financial management with automated, accurate calculations.
• Improve cash flow and support potential legal action.

Overall, it's a crucial tool for financial health and positive customer relations.

How to calculate late payment interest using this late payment calculator?

Late payment interest is an additional fee charged on outstanding invoices that have surpassed their due date. It's a way to compensate businesses for the delay in receiving payment and to encourage prompt settlement of invoices.

Here's a breakdown of how to calculate late payment interest using this late payment calculator:

1. Input required Information

• Invoice amount: The original total amount due on the invoice.
• Interest rate: The percentage rate specified in your contract or by law for late payments.
• Invoice date: The date the invoice was issued.
• Due date: The date the payment was originally due.
• Payment date: The date the payment was actually made (or the current date if the payment is still outstanding).
  
  

2. Automatic calculation

The calculator will use the inputted information and a formula to automatically calculate the interest accrued on the overdue invoice. The formula typically involves multiplying the outstanding balance by the interest rate and the number of days the payment is late.

3. Review and update invoice

Carefully review the calculated interest amount to ensure its accuracy. If the amount is correct, add it to the original invoice total to update the amount the customer now owes.

Additional considerations

• Compound interest: Some calculators may offer the option to calculate compound interest, where interest is charged on both the original amount and the accrued interest.
• Payment terms: Review your payment terms and the applicable laws to ensure you're charging a fair and legal interest rate.
• Communication: Clearly communicate the late payment interest charge to your customer, explaining how it was calculated and the updated invoice total.
• Dispute resolution: Have a process in place to handle disputes regarding late payment interest charges.

Easily manage late payments with Chaser

To manage late payments with Chaser, utilize their free late payment interest calculator to accurately determine interest on overdue invoices. Input the invoice amount, interest rate, invoice date, due date, and payment date into the calculator. 

The tool then automatically calculates the interest accrued. Review the calculated amount, and if accurate, add it to the original invoice total to update the amount owed. Chaser streamlines the debt recovery process and ensures businesses receive the full amount they are rightfully owed.

FAQs

Can you legally charge interest on overdue invoices?

Examination of your established payment terms and relevant jurisdictional laws is imperative to guarantee the implementation of an interest rate that is both equitable and legally compliant.

What is late payment forgiveness?

Late payment forgiveness is when a creditor or business decides to waive or reduce the late payment fees or interest that would normally be charged on an overdue invoice.

Do late payments ever go away?

Late payments will eventually be removed from your credit report after a certain period, but the debt itself may still exist. While collection efforts may decrease over time, the debt may be sold to another collector. Even if the late payment is removed from your credit report, it may remain in the company's internal records and could influence future business interactions.