Invoice Due Date & Settlement Discount Calculator
Work out payment due dates, late payment interest, and whether an early settlement discount is worth taking.
Formula
effective annual cost = (d / (1 − d)) × (365 / (net − discount days))
Tips
- A 2% discount for paying 20 days early is worth about 37% a year. Almost any business should take it rather than hold the cash.
- UK businesses can charge statutory interest at 8% above the Bank of England base rate on late commercial payments, plus fixed compensation of £40, £70 or £100 depending on invoice size.
- The base rate used here is an assumption. Check the current Bank of England rate before issuing a formal demand.
- Terms run from the invoice date unless the contract says otherwise. "Net 30 from end of month" is a materially different arrangement.
Frequently asked questions
Can I really charge late payment interest?
In the UK, the Late Payment of Commercial Debts (Interest) Act 1998 gives businesses a statutory right to interest and fixed compensation on overdue commercial invoices, unless the contract provides a substantial alternative remedy. Many suppliers never invoke it, but the right exists.