Invoice Payment Terms Calculator
Calculate early payment discounts and late payment interest. Should you offer 2% off for payment within 7 days? What can you claim if a customer pays 60 days late? Get the numbers.
Invoice Details
When payment is normally due
Early Payment Discount
Pay within X days for discount
Typical: 1-3% for early payment
Late Payment Interest
How many days past due date
Current rate: 4.5% (2025)
Early Payment Analysis
Early Payment Amount
£4900
2% discount = £100 saving for customer
Cost of Discount to You
Verdict
❌ DON’T OFFER THIS DISCOUNT
You’re giving away £100 to get paid 23 days sooner. That’s an effective interest rate of 31.7% — more expensive than a business loan.
Keep 30-day terms and chase at 7 days overdue instead of paying customers to pay you.
Late Payment Analysis
Statutory Interest
£103
12.5% per year (4.5% base rate + 8%)
Total Late Payment Claim
Daily Interest Accrual
Interest accrues at £1.71/day
Each additional day overdue costs the customer £1.71 in statutory interest.
⚖️ Legal Note
Statutory interest applies to business-to-business transactions under the Late Payment of Commercial Debts (Interest) Act 1998. Not applicable to domestic customers.
💰 Early Payment Discounts
Only offer if cash flow is tight. 2% discount for 7 days early = 31.7% annual cost. Most businesses don't need to offer this.
⚖️ Late Payment Interest
Mention it in your terms as a deterrent, but only enforce for habitual late payers (60-90+ days). Small businesses/good customers get polite reminders.
📅 Best Payment Terms
Domestic: due on completion. Small businesses: 7-14 days. Commercial: 14-30 days max. Avoid 60-90 day terms unless absolutely necessary.
⏰ Put Payment Terms into Practice
Work out sensible terms here, then back them up with clear invoices and a routine for chasing what's overdue.
Agree terms upfront
Make due dates and late fees explicit on every quote and invoice.
Track slow payers
Keep a simple list of customers who regularly pay late.
Follow up consistently
Send polite reminders on a schedule you can actually stick to.