Work out what an overdue invoice is really owed.

Start with the rule that trips most people up. In New Zealand there is no automatic right to charge interest on an overdue invoice. There is no statutory rate that kicks in for business-to-business debts. If you want to charge interest, your terms of trade have to say so, in writing, agreed before the work.

If your quote, contract, or terms do not mention interest on overdue amounts, you have no contractual basis to add it, and the customer can simply refuse to pay it. Slapping "2% per month interest" on the final invoice for the first time does not make it enforceable. The agreement has to exist first. That is why the clause above belongs on your quote and your signed terms, not on the invoice you send when the job is already late.

Because there is no set rate, you choose one, but it has to be reasonable. Common practice in New Zealand sits between 1% and 2% per month, which is roughly 12% to 24% a year. The calculator defaults to 12% per year as a sensible middle. Pick a figure you can justify as covering the genuine cost of being kept out of your money, not a number designed to punish.

That distinction matters legally. A charge that looks like a punishment rather than a genuine estimate of your cost can be treated as an unenforceable penalty, and a court or the Disputes Tribunal can refuse to enforce it. Keep the rate moderate, calculate it as simple interest on the amount actually owed, and it is far easier to defend. This is a guide, not legal advice, so if you are setting terms for large jobs, get them checked.

Interest is a backstop. It rarely gets you paid faster on its own, because the sort of customer who ignores an invoice tends to ignore the interest too. The things that actually move payment forward happen earlier, in how you set the job up.

• Take a deposit. A third up front on anything sizeable filters out the people who were never going to pay and covers your materials if they stall.
• Shorten your terms. Net 7 or on-completion beats the month-end-plus-20 that lets an invoice drift for six weeks. Shorter terms simply get paid sooner.
• Word the due date plainly. "Due by 14 March" is clearer than "payment within 14 days", and a clear date is harder to argue with.
• Automate the reminders. A polite nudge the day before due, on the due date, and a week after catches most late payers without an awkward phone call. Most invoicing apps do this for free.

Interest and a firm final demand are for the ones who still do not pay after all that. Set the job up right and you rarely have to reach for them.

Business owners worry that mentioning interest makes them look aggressive. It does the opposite when it is framed as standard. Put it in your terms as a normal clause, the same way a power company or a supplier does, and reference it once when you send the quote: "Our standard terms include interest on overdue accounts, but we very rarely need it." That signals you are professional and you expect to be paid on time, without a threat.

Good clients never trigger it, so they never think about it. It only bites the late payers, which is exactly who it is for. The clients you want to keep read a clear set of terms as a sign you run a tidy business, not a warning.

There is a point where chasing costs you more in time and stress than the debt is worth, and where the answer is to escalate rather than keep sending reminders. For a genuine debt that is clearly owed and being ignored, New Zealand's Disputes Tribunal is built for exactly this. It is designed to be used without a lawyer, and as of January 2026 it handles claims up to $60,000.

Filing fees are modest, running from about $62 for the smallest claims up to $496 for the largest band, so the fee is small against a real invoice. Before you file, send one final written demand that states the amount, references the terms they agreed to, and gives a clear deadline to pay. Keep it factual. If that is ignored, file. Having your interest clause and a clean record of the invoice and reminders makes your case straightforward. If chasing money is eating your week, the deeper fix is often a booking and invoicing setup that stops it happening, and a free look at how your site and systems present is a fair place to start.