Compounding Interest on Invoices
Encourage timely payments by applying compounding interest to overdue invoices. The longer a balance sits, the stronger the incentive to pay.
01 / Compounding Interest
What is compounding interest?
Compounding interest is interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods. Unlike simple interest, where interest is only calculated on the principal, compounding interest grows faster because you earn interest on interest.
When an invoice becomes overdue, you can apply an interest rate that compounds over a set cadence, weekly or monthly. The outstanding balance grows over time, turning a late payment into a real cost for the client and a stronger reason to pay promptly.
- Apply interest automatically once an invoice goes overdue.
- Compound weekly or monthly on the outstanding balance.
- Set a default policy for your whole business in one place.
- Override the rate or cadence per invoice or per client.
02 / Capabilities
What you can do
Flexible configuration from a business-wide default down to individual invoices, with the math handled for you.
System-level policy
Configure a default policy for your entire business and apply compounding interest rules automatically to all new invoices.
Invoice-level overrides
Override system defaults or apply specific interest rules for individual invoices or clients when a situation calls for it.
Custom interest rate
Set the interest rate as a percentage of the outstanding balance, tuned to how firmly you want to encourage payment.
Choose your cadence
Pick the compounding frequency, weekly or monthly, to match your payment terms and collection rhythm.
Automatic calculation
The balance compounds for you each period using A = P(1 + r/n)^(nt), so the math is always accurate.
Stronger incentive to pay
A balance that grows over time turns time from an enemy into an incentive, nudging clients to settle sooner.
03 / Process
How it works on invoices
Set your rate and cadence
Choose an interest percentage and whether it compounds weekly or monthly, at the system or invoice level.
Invoice goes overdue
When an invoice passes its due date, the compounding rules you configured kick in on the outstanding balance.
Interest compounds each period
Each cadence period adds interest on the principal plus previously accumulated interest, so the balance grows steadily.
Client pays the updated total
The invoice reflects the compounded amount, giving clients a clear, growing reason to pay without delay.
04 / FAQ
Compounding interest FAQ
How is compounding interest calculated?
It uses the standard formula A = P(1 + r/n)^(nt), where P is the original invoice balance, r is the rate, n is how often it compounds, and t is the time overdue. For example, $1,000 at 5% per month becomes $1,050, then $1,102.50, then $1,157.63 over three months.
How is it different from simple interest?
Simple interest is calculated only on the original principal. Compounding interest adds each period interest to the balance, so future interest is charged on a larger amount and grows faster.
Can I choose how often it compounds?
Yes. You can set the cadence to weekly or monthly, and set the interest rate as a percentage of the balance, either as a system default or per invoice.
Does it apply to every invoice automatically?
Only if you want it to. Configure a system-level default to apply rules to all new invoices, or override the rate and cadence for specific invoices and clients.
Make late payments cost something.
Turn overdue invoices into a clear incentive with compounding interest that does the math for you.
Free tier included with every account. No credit card required.