OwedRate.

Late Payment Interest in Australia (2026)

10% per year (common benchmark) — No national statutory rate for private invoices — contract terms govern. 10% is the long-standing Victorian penalty interest rate, a widely used benchmark; courts can award pre-judgment interest (e.g. RBA cash rate + 4%). On a $5,000 invoice 60 days overdue, the money already owed to you looks like this:

Total owed on a $5,000 invoice · 60 days late

$5,082.19

Growing $1.37 every day it stays unpaid

principal
$5,000
interest
$82.19

Rate verified 2026-07-06 · Source: Supreme Court of Victoria — Penalty interest rates · Methodology

Calculate your invoice

Rate prefilled from the Australia default (10% per year (common benchmark)) — override it if your contract sets its own.

A$

60 days overdue

%

Australia default: 10% per year (common benchmark)

Total now owed to you · Australia

$5,082.19

$5,000 principal · 60 days overdue at 10%

interest accrued
$82.19
growing daily by
$1.37

Simple interest: amount × (10% ÷ 365) × 60 days. Information, not legal advice — contract terms can override statutory defaults.

The rule in plain English

Australia has no general statutory right to late-payment interest on private commercial invoices — your contract or terms of trade must provide for it. Without a clause, you generally cannot add interest until you sue and a court awards it.

A widely used benchmark is the Victorian penalty interest rate, 10% per year since 1 February 2017. Rates in the 8–12% range are commonly upheld as reasonable; well above that risks being challenged as a penalty.

If a dispute reaches court, judges can award pre-judgment interest under court rules — for example, Federal Court practice applies the RBA cash rate (4.35% as of June 2026) plus 4 percentage points.

Government buyers are different: under the Commonwealth Supplier Pay On-Time Policy, agencies pay interest automatically on eligible invoices paid late.

Legal basis: Contract law; Penalty Interest Rates Act 1983 (Vic) as benchmark; court rules for pre-judgment interest.

Worked example

invoice = $5,000, 60 days overdue, rate = 10.00%

daily interest = $5,000 × (10.00% ÷ 365) = $1.37

interest = $1.37 × 60 days = $82.19

total owed = $5,082.19

What to include in your demand letter

A short, factual letter recovers more invoices than a heated one. Checklist (general guidance, not legal advice):

  • Invoice number, date, original due date, and the exact principal outstanding.
  • The interest calculation shown line by line — principal, rate (10% per year (common benchmark)), days overdue, daily amount — so there is nothing to dispute.
  • The legal or contractual basis for the interest (Contract law; Penalty Interest Rates Act 1983 (Vic) as benchmark; court rules for pre-judgment interest).
  • A single clear deadline (7 or 14 days is customary) and the payment details — remove every excuse for delay.
  • What happens next if unpaid: a letter before action, small claims / court filing, or referral to collections — stated plainly, without threats you don’t intend to keep.
  • A note that interest continues to accrue daily until payment — quote the per-day figure from the calculator above.

FAQ

What interest can I charge on a late invoice in Australia?
No national statutory rate for private invoices — contract terms govern. 10% is the long-standing Victorian penalty interest rate, a widely used benchmark; courts can award pre-judgment interest (e.g. RBA cash rate + 4%). On a $5,000 invoice 60 days overdue, that is about $82.19 in interest. (Contract law; Penalty Interest Rates Act 1983 (Vic) as benchmark; court rules for pre-judgment interest; verified 2026-07-06.)
Do I need a clause in my contract to charge this?
Effectively yes. Australia has no automatic statutory right to add interest to a private commercial invoice — your contract or terms of trade should specify the rate. Without one, you are limited to the default legal rate on liquidated debts, typically only recoverable once you pursue the claim.
How is late payment interest calculated?
Simple interest on a daily basis: invoice amount × (annual rate ÷ 365) × days overdue. Interest normally runs from the day after the due date. The calculator above shows the formula with your own numbers.
Does the Australia rate change?
The Victorian penalty rate has been 10% since 1 Feb 2017 but can change by gazette. Court pre-judgment rates track the RBA cash rate (4.35%, June 2026).
Can I really send an invoice for the interest?
Yes — the standard practice is a short statement or updated invoice showing the principal, the daily interest accrued to date and the legal basis (Contract law; Penalty Interest Rates Act 1983 (Vic) as benchmark; court rules for pre-judgment interest). Many creditors find the demand itself prompts payment. This site provides information, not legal advice; for significant sums, confirm your position with a professional before escalating.

This page is general information about Australia, verified 2026-07-06 against Supreme Court of Victoria — Penalty interest rates. It is not legal advice, and statutory rules have exceptions and transition rules that a short summary cannot capture. Contract terms often override statutory defaults. For significant or disputed sums, consult a qualified professional in your jurisdiction.

Other jurisdictions

← Late payment interest calculator (all jurisdictions)