The interest rate calculator is used to calculate interest on overdue invoices. The rate applicable to overdue invoices is 8% plus the relevant Bank of England base interest rate. Follow the instructions below for each question to use our calculator correctly to calculate interest on a late payment.
Do you have contracted payment terms?
Confirm whether you have agreed payment terms in a contract by selecting the Yes or No buttons. These terms should outline when you can expect to be paid and may have been agreed verbally or in writing.
What are your payment days from date of invoice as per the contract?
You will only be asked this question if you answered yes to the previous question. Enter the number of days you agreed with the customer, before being paid, into the text field below the question. For example, 30 or 60 days.
What was the date of the invoice?
Enter the day, month and year of the invoice into the appropriate text fields below the question. This is the date that the customer was in receipt of the invoice.
If the overdue invoice has been paid, what was the date of payment?
Only complete this question if the overdue invoice has been paid. If the invoice has been paid, enter the day, month and year of the payment into the appropriate text fields below the question. You’re still entitled to apply and claim interest and compensation for the period covering the date the payment became late to the date the customer paid you.
How much are you owed for this invoice?
Including VAT, enter the total amount for the unpaid invoice into the field below.
Frequently Asked Questions
The invoice should have the date it will be submitted to the customer, including the original invoice date the interest and compensation is in relation too.
The OSBC’s interest calculator has been designed to comply with the Late Payment of Commercial Debts (Interest) Act 1998. This means that it uses the Bank of England (BoE) base interest rate applicable on 31 December, from 1 January to 30 June, and base rate applicable on 30 June, from 1 July to 31 December, from each year – plus 8% – to determine the statutory interest applicable for your overdue invoice. You can visit the BoE website to review current and legacy interest rates.
You can only collect interest on a late payment up to a maximum of 6 years from the date following the end of the contracted payment terms.
Yes, use the total amount (including VAT) when using our calculator to calculate interest and compensation on a late payment.
For example, if the value of your work comes to £1,000 then £200 VAT (currently 20%) would be added to create your invoice total: £1,200. If this payment becomes late, you are entitled to claim interest and compensation for the full value of the invoice: £1,200.