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Can I charge interest on overdue invoices in Australia?

Short answer

Generally you can charge interest on a late invoice if your customer agreed to it in your contract or terms of trade before the work was done. If there was no agreed rate, you usually cannot add interest yourself, although a court or tribunal may award interest if you take the debt to a claim. Any agreed rate should be reasonable.

General information only, not legal or financial advice. Every business and every debt is different. For advice on your situation, talk to a lawyer, your accountant or your state small business commissioner.

Step by step

  1. 1

    Check what was agreed

    Look at your quote, contract, terms of trade and invoice wording.

  2. 2

    If a rate was agreed, apply it as written

    Use our calculator to work out the amount.

  3. 3

    If no rate was agreed, do not add one now

    Instead, fix your terms for future work.

  4. 4

    Keep penalties reasonable

    Very high fees in standard form contracts can be challenged as unfair terms.

What else to know

Courts use published reference rates when awarding interest. For example, the Federal Court publishes pre-judgment and post-judgment rates linked to the RBA cash rate, and Victoria has a penalty interest rate fixed under the Penalty Interest Rates Act 1983. These are useful benchmarks but they do not automatically give you a right to charge interest on an invoice.

Small businesses also have protection from unfair terms in standard form contracts, so make sure any late fee clause in your own terms is fair.

Late payment interest calculator

Common questions

What interest rate should I put in my terms?

Choose a rate that is clear and reasonable. Some businesses reference a published rate such as a court rate. Get advice if unsure.

Can I charge a flat late fee instead?

Possibly, if agreed in advance and reasonable. A fee that looks like a penalty rather than a genuine cost may not be enforceable.

Official sources

Sources checked 14 October 2026. Rules and limits change, so check the official site before acting.

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