METHOD & GUIDANCE
How this calculation works
Keep every input on the same time basis—for example, one month or one financial year—and do not mix cash figures with accrual figures. Tool IQ recalculates every output immediately; nothing you enter is saved or sent to us.
How to use the result
Use this only for a UK commercial debt where statutory interest may apply. Enter the invoice total including VAT, overdue days and the Bank of England reference rate for the relevant six-month period.
Worked example
A £5,000 invoice that is 45 days overdue at an entered 3.75% reference rate produces simple interest at 11.75% a year, plus the £70 compensation band.
Common mistakes
- Using today's Bank Rate instead of the statutory reference rate for the relevant period.
- Claiming statutory interest where the contract sets a different substantial remedy.
- Applying commercial-debt rules to consumer debts or assuming the estimate guarantees recovery.
Frequently asked questions
Is the late payment interest calculator free?
Yes. It requires no account and stores no calculation inputs.
Can I use the answer for a formal filing?
No. It is a planning estimate, not accounting, tax, legal or investment advice. Confirm material decisions with a qualified professional.
Which period should I use?
Keep every input on the same basis—for example, one month or one financial year. Use current figures first, then save a cautious scenario for comparison.
Continue the decision
- Days Sales Outstanding Calculator — See how long customer invoices take to become cash.
- Cash Flow Forecast Calculator — Project closing cash from collections, payments and one-off movements.
- Cash Runway Calculator — Estimate how many months your available cash will last.
Popular small-business decision paths
Get the free late-payment demand-letter pack →
Optional email capture; this calculator remains free.
Official reference: Small Business Commissioner interest calculator guidance. Check the applicable rate and your contract before issuing a claim.
Method reviewed 5 August 2026. Figures are illustrative and calculated locally in your browser. Official sources are linked where a rule or obligation affects how the result should be used. Read the Tool IQ calculation standard for our checking process, limitations and corrections policy.