Examples of interest calculation for overdue invoices

You sent a sales invoice of € 612.15 to a customer on February 1. The invoice due date is February 16. Until March 1 you do not received any payments from this customer. You send the customer an interest invoice.

13 days have elapsed between the due date and the interest invoice date. Therefore, the interest percentage is 10% over a period of 13 days.

The formula is:

open invoice amount * actual interest percentage on interest invoice date / number of days in year * (interest invoice date - due date or previous interest calculation date) 

This results in:

€ 612.15 * ((10%) / (365 days) * 13 days) = € 2.18

You sent a sales invoice of € 612.15 to a customer on February 1. The invoice due date is February 16. Until March 1 you do not received any payments from this customer. You send the customer an interest invoice.

13 days have elapsed between the due date and the interest invoice date. Therefore, the interest percentage is 10% over a period of 13 days.

On March 15, you send an additional interest invoice. The previous invoice was sent on March 1. Therefore, the interest must be calculated over a period of 14 days.

As it is already 27 days after the due date, the interest percentage is increased to 20%.

The formula is the same as in Example 1:

open invoice amount * actual interest percentage on interest invoice date / number of days in year * (interest invoice date - due date or previous interest calculation date) 

This results in:

€ 612.15 * ((20%) / (365 days) * 14 days) = € 4.70

You sent a sales invoice of € 612.15 to a customer on February 1. The invoice due date is February 16. On February 20, the customer paid € 584.65, excluding the late payment surcharge of € 27.50.

You send the customer an interest invoice on March 1. The payment was made 4 days after the due date. Therefore, 2% interest must be charged.

13 days have elapsed between the due date and the interest invoice date. This means that the interest percentage for the remainder amount is 10% over a period of 13 days.

The formula for the paid amount is:

paid invoice amount * actual interest percentage on payment date / number of days in year * (receipt date - due date or previous interest calculation date)

This results in an interest invoice for the paid amount of:

€ 584.65 * ((2%) / (365 days) * 4 days) = € 0.13

The formula for the paid amount is:

open invoice amount * actual interest percentage on interest invoice date / number of days in year * (interest invoice date - due date or previous interest calculation date)

This results in an interest invoice for the unpaid amount of:

€ 27.50 * ((10%) / (365 days) * 13 days)* = € 0.10

You sent a sales invoice of € 612.15 to a customer on February 1. A payment schedule with two due dates is linked to this invoice. The first 70% of the amount (€ 428.50) is due after 10 days. The remaining 30% of the amount (€ 183.65) is due after 30 days.

Until March 1 you do not receive any payments from this customer. You send the customer an interest invoice.

You send the first interest invoice on February 28. The same progressive interest rates from the previous examples are used. As the due date for the last 30% is on March 2, this interest invoice only applies to 70% of the invoice amount. The interest invoice amount for the unpaid amount is:

€ 428.65 * ((20%) / (365 days) * 17 days) = € 3.99

On March 12, you send the next interest invoice. This time, the last 30% of the invoice amount is also considered. However, this part is only 10 days overdue, and therefore an interest rate of 10% applies to this amount. The period for this part is calculated from its due date, March 2.

To the other 70% of the invoice amount, an interest rate of 20% applies and this is calculated from the previous interest invoice date (February 28).

The total interest invoice amount is:

€ 2.82 + € 0.50 = € 3.32

Interest total: USD 559.