Cost of Late Payment Calculator

How to read the result

The finance cost is the cost of having that money unavailable for the average time it stays overdue — the amount outstanding, multiplied by your cost-of-funds rate, for that share of a year. The time cost values the hours your team spends chasing it. Together they show the running cost of an overdue ledger that most businesses never put a number to.

The "if it ran all year" figure shows what this costs on an annualised basis — useful for understanding the impact on profitability if late payment is a recurring pattern, not just a one-off.

How to use this calculator

1. Enter the total value of your current overdue receivables.
2. Enter the average number of days those invoices have been overdue. If you're not sure, check your accounts-receivable ageing report — the weighted average across 30-, 60- and 90-day buckets gives a reasonable starting point.
3. Enter your cost of funds — this is typically your overdraft rate, or the rate on any facility you draw on to cover the gap. If you hold the cash in a term deposit you could otherwise be earning, use that rate instead.
4. Optionally, fill in the time fields — hours per month chasing debtors, and the hourly cost of that time.

Why this matters

The most common response to a late-paying ledger is to do nothing, or to send another reminder. The reason most businesses do nothing is that they haven't put a dollar figure on the cost of inaction. This calculator gives you that figure — and most businesses are surprised by it.

If the number is significant, it's worth speaking to Merion. Our commission-only model means you pay nothing unless we collect — so the question is really whether recovering what you're owed is worth the portion you'd keep.

See also: Net Recovery Estimator — how much you'd keep after our commission; Recovery ROI Calculator — is it worth referring this specific debt?

This is a general, indicative estimate for illustration only — not financial, accounting or legal advice, and not a quote. Your actual costs depend on your own circumstances. Merion's recovery fee is a commission agreed in writing before any work begins. See our fee basis.