There is no default rate. There is only the one you wrote down.
Australian law gives a supplier no automatic right to interest on a late
invoice. The right comes from the contract: if the terms of the sale say that
overdue amounts carry interest, and at what rate, then that rate applies. If
they say nothing, the answer is nothing
— however
late the payment is, and however reasonable a figure this page shows.
The rate in the calculator starts at 10% a year because that is a figure
commercial terms commonly name. It is not a figure the law names. Set it to
whatever your terms actually say, and if they say nothing, the number to take
from this page is the one you are giving up.
Three things the terms have to say.
The rate, as a percentage a year. When it starts, which is normally the day
after the due date. And how it is worked out, which for a small invoice is
simple interest, calculated daily. One sentence covers all three:
“Overdue amounts accrue interest at 10% a year, calculated daily from the day after the due date until paid.”
Where the sentence sits matters. Terms that first appear on the invoice, after
the work is done, are the weakest form of agreement there is — the client never
agreed to them. Put the rate in the quote or the engagement letter that the
work was done under, and repeat it on the invoice so the due date and the rate
are on the same piece of paper.
It is simple interest, by the day.
The amount, times the annual rate, divided by 365, is a day's interest. Times
the days overdue is what has accrued. On
$1,500
at 10% that is 41 cents a day:
$5.75
after a fortnight, $12.33
after a month. Not compounded — the interest does not itself earn interest —
and rounded to the cent only when it is billed, so the fortnight is $5.75 and
not fourteen lots of 41 cents.
The figures are small. That is what makes them worth looking at: a client who
is two weeks late has cost you a coffee, and a client who is two weeks late on
every invoice has cost you a week of every year. The interest is not the
reason to chase. It is the reason to have written the terms.
A court's rate is a different number.
If an unpaid invoice ever reaches a court, the court can award interest on the
debt at a rate it sets itself, which varies by state and by court and moves with
the cash rate. That is a figure for a judgment, not for an invoice, and this
page does not attempt it. What you can put on an invoice is the rate your
terms state.
This page reports arithmetic.
What is 10% a year on $1,500 for a fortnight
is a question it can answer;
can you enforce the rate in your terms
is legal advice, and there is no lawyer behind Bilby.
For the GST on an amount, in either direction, there is the
GST calculator
. The longer questions about invoicing are worked through in the
guides
.