This is used for those wanting to **calculate a daily interest charge**, pro-rated from a per annum charge.

This will take your interest rate and apply it to the outstanding balance. As this is per annum we then divide it by 365 to get a daily interest charge.

We then multiply the daily charge, by the number of overdue days (grace period) OR how many days since we last sent a penalty for this invoice.

For example:

$10,000 invoice

Daily P.A rate is set at 7.9%

Annualised this = $790

The invoice collects interest of = $790 / 365 days = $2.16 per day interest

If the invoice is 30 days overdue = 30 days x $2.16 per day = $64.80

## Best practice:

The calculation of the overdue interest will only occur **when the penalty is issued**.

For this we recommend that you use

**New Invoice**setting (to avoid compounding beyond the annualised amount)To set a

**Grace Period**, as if this is set to 0, there will be no interest to charge.and to set

**Repeat Late Fee**. For each period (example every 30 days) for the compounding of the fee to occur.

For reference we have followed guidelines set here: Gov UK