What you'll do
- Check whether your terms allow interest and costs
- Understand the difference between interest and recovery costs
- Calculate interest accurately from the right date
- Present interest and costs as clear, separate lines
- Avoid common mistakes that weaken a claim
7 min
Check your right to charge
You can usually only add interest and recovery costs if your terms of trade or contract allow it, and the debtor accepted those terms. Check the wording before you add anything. This is general business information, not legal advice; if you are unsure of your entitlement, consider getting advice.
Calculate it step by step
- Confirm your terms permit interest, and at what rate.
- Identify the date the debt fell overdue.
- Work out the number of days overdue to today.
- Apply the agreed rate to the principal for that period.
- Add any recovery costs your terms allow, itemised separately.
- Show the principal, interest and costs as distinct lines.
A clear breakdown is far more persuasive than a single lump sum.
Keep it clean
Do not roll interest into the principal, and do not charge more than your terms permit. The Merion tools can help you calculate interest over the right period. Once your figures are set, refer the debt at merion.com.au/refer-a-debt with the breakdown attached.
Good to know
- You generally need terms that allow interest and costs before charging them
- Calculate interest from the overdue date using the agreed rate
- Itemise principal, interest and costs as separate lines
FAQ
Can I always charge interest on a late debt?
Usually only if your terms of trade or contract allow it and the debtor accepted them. Check the wording before charging interest.
What counts as a recovery cost?
Reasonable costs of recovering the debt, where your terms permit them. Itemise them separately rather than rolling them into the principal.
From what date should interest run?
Generally from the date the debt fell overdue, applying the agreed rate to the principal for the days outstanding.
Still not sure? Our team is happy to talk it through.