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Debt + Interest Calculator

Estimate what an overdue invoice is worth today, including interest. Enter the interest rate your contract provides for — if it doesn't provide for one, leave it at zero.

Use the rate written into your contract or terms of trade. If your contract doesn't provide for interest, leave this at 0 — you generally can't add interest to an invoice just because it's late.

Optional — we'll save these details so we can help you chase this later. Privacy.

Can you actually charge interest?

This is the question to settle before you put an interest figure in front of a debtor. Broadly, there are two ways interest becomes payable:

  • Your contract says so. If your terms of trade or signed contract include an interest clause, that clause sets the rate and when it starts running.
  • A court awards it. If a matter goes to judgment, a court may award pre-judgment interest. In NSW that discretion sits under the Civil Procedure Act 2005 (NSW), and the rate is set by Practice Note rather than being a fixed figure.

If neither applies, you generally have no entitlement to interest, and claiming it anyway risks overstating what you are owed. The calculation itself is simple interest: Principal × Rate × (Days Overdue ÷ 365).

Before you demand interest, check your contract. Overstating the amount owed in a demand can be misleading conduct, and it hands the debtor an easy reason to dispute the whole claim. If you're not sure whether you can charge it, leave it out or get advice.
Learn how to write a letter of demand →

This calculator produces an estimate from the figures you enter. It does not tell you what you are legally entitled to claim. SydneyCollect is not a law firm and this is general information, not legal advice.

What the 2026 report says about waiting

Calculating interest is the easy part. The harder question is how long you can afford to wait before acting. Our 2026 Australian Debt Collection Report (Section 8) shows that the cost of waiting is not just the foregone interest — it's the sharp increase in debtor failure probability:

  • A debtor with 1 formal trade default has a 20–24% probability of business failure within 12 months
  • With 2 defaults: 42%
  • With 3+ defaults: 62%

Once a debt enters formal insolvency, unsecured creditor returns collapse to less than 5 cents in the dollar on average (AFSA data). Interest accrued on an unpaid invoice is small consolation if the debtor enters liquidation. The 2026 report's recovery-rate ladder shows the letter of demand is the single highest-recovery, lowest-cost step you can take — 55–70% recovery rate at $29–$300 cost, typically resolved within 7–21 days. The economics of acting at day 30 past due rather than day 90 are unambiguous.

Read the full recovery-rate ladder: Open the 2026 Australian Debt Collection Report →

Can you actually charge interest on an overdue invoice?

Only if something gives you the right to. Australia has no statutory late-payment interest for ordinary commercial contracts — unlike the UK and the EU, there is no default rate you can fall back on. Your entitlement comes from one of three places: a term in your contract or trading terms, a court awarding pre-judgment interest, or a specific statute for that kind of debt.

That is why this calculator asks you for the rate instead of assuming one. If your terms are silent, the honest answer is that you are owed the principal, and interest is something a court may add later rather than something you can demand now.

What rate should you use if your contract sets one?

Whatever the contract says — but check it is enforceable before you rely on it. A rate set far above commercial reality can be attacked as a penalty rather than a genuine pre-estimate of loss, and an unenforceable interest clause weakens the rest of your demand.

Courts award pre-judgment interest at rates set by practice notes in each jurisdiction, generally benchmarked to the RBA cash rate plus a margin. If you want a defensible number and your contract is silent, that benchmark is a more credible starting point than a figure you picked.

Is chasing this debt worth the time?

Compare the total against what recovery costs. A $600 debt does not justify a filing fee and a day of your time; a $60,000 debt justifies a great deal. Between those, the number that matters is not the interest — it is how likely you are to be paid at all.

CreditorWatch's default data is the useful benchmark: a business with one payment default has roughly a 20% chance of failing within twelve months, two defaults 42%, and three or more 62%. Interest accruing on a debt owed by a business in that third bracket is a number on a page, not money. Move faster rather than calculating more precisely.

Should the interest go in your letter of demand?

Yes, if you are entitled to it — shown as a separate line, with the rate and the basis stated. A demand that quietly rolls interest into one total invites an argument about the whole figure. A demand that says "principal $12,500, interest at 8% per annum from 1 July under clause 6, total $13,140" is much harder to dispute in part.

The free letter of demand generator will build that letter for you and download it as Word or PDF.

When is this calculator not enough?

  • Your terms are silent on interest. Then the number here is hypothetical, not owed.
  • The debt is close to the limitation period. Check that first — interest on an unenforceable debt is worth nothing.
  • You want compound interest. This calculates simple interest. Compounding needs an express contractual right and is more often challenged.
  • It is a consumer credit debt. The NCCP Act regime caps and regulates what can be charged.

What other free tools are here?

Include this amount in a formal letter

Send a lawyer-backed letter of demand with the amount you're owed — free, takes 5 minutes.

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