Helping Clients Claim Interest

The Right To Charge Interest

A client can generally charge interest on overdue amounts where their terms of trade provide for it and the customer agreed to those terms. Without such a clause, charging interest is far harder to justify after the fact. So the foundation is the contract: interest works because it was part of the deal, not because it was bolted on once payment went late.

This is general information rather than legal advice, and the specifics of what can be charged should be checked against the client's terms and applicable law. The practical point for advisers is to ensure the entitlement exists in writing before a client ever needs to rely on it.

Draft A Clause That Works

An interest clause should be simple and unambiguous: it should state the rate, how it is calculated, and from when it accrues. A rate that is clearly defined and reasonable is easier to enforce and harder to challenge than a vague reference to charging interest 'where applicable'. Clarity is what gives the clause teeth.

Encourage clients to set a rate that genuinely reflects the cost of late payment without straying into territory that looks punitive. The goal is a clause that compensates fairly and that the client is comfortable standing behind, since a clause they are reluctant to enforce protects no one.

Interest As An Incentive

Interest is most powerful as a behavioural nudge rather than a revenue line. When customers know that overdue accounts accrue interest, prompt payment becomes the cheaper option, and many simply pay on time to avoid it. Used this way, the interest a client actually collects matters less than the lateness it prevents.

Frame it to clients as part of the incentive structure of their terms, sitting alongside any early-settlement discount. The Merion tools can help a client see the cost of carrying overdue balances, which often clarifies how much an effective interest clause is really worth.

Apply It Consistently

An interest clause only stays credible if it is used. A client who threatens interest but never charges it trains customers to ignore the threat. Applying interest consistently — even where it is later waived as a goodwill gesture in negotiation — keeps the clause meaningful and the due date taken seriously.

When an overdue account is eventually pursued, properly documented interest can form part of what is claimed. If a debt reaches that stage, the client can refer it for recovery, and a clear, consistently applied interest entitlement strengthens the overall claim.