Invoice Delay Cost Calculator NZ
This invoice delay cost calculator shows what it costs you to send invoices days or weeks after the work is finished. Every day an invoice sits unsent is a day added to the time before you are paid, because your client's payment terms only start counting from the invoice date. If you finish a job on the 3rd but invoice on the 15th, the cash arrives twelve days later than it could have, and the same happens month after month. The result is a steady amount of money that is always owed to you but not yet billed, which you either borrow to cover, through an overdraft or a loan, or go without. You enter what you bill in a typical month, the average number of days between finishing work and invoicing it, and an interest rate. The calculator gives you the cash tied up at any one time, what you bill in an average day, the annual cost of financing that cash and what each day of delay costs over a year. The interest rate is your own figure: use your overdraft or business loan rate if you borrow to cover the gap, or what the money would earn if you would otherwise have it on deposit. The days late are your own estimate, so check a few recent jobs against the dates you invoiced them.
From the same team as Calculate.co.nz
Your Timesheets at jobtracker.co.nz logs your hours on a week grid or a timer that keeps counting when your phone locks, free on every plan. Career and Timesheets turns those hours into projects and rates, fixed fees and retainers, numbered invoices with GST only when you are registered, expenses and mileage, and the tax to set aside, from $4.99 a month billed yearly.
Log your hours freeThe interest rate is your own: an overdraft or loan rate if you borrow to cover the gap, or what the money would earn on deposit. The days late are your own estimate.
How it works
The calculator turns your monthly billings into an average day's billings by dividing by 365 divided by 12, which is about 30.4 days, the average length of a month. The cash tied up is that daily figure multiplied by the days between finishing work and invoicing it: it is the work you have always done but not yet billed. The annual financing cost is the cash tied up multiplied by your interest rate, because that amount is outstanding all year round. The cost of each day's delay is the annual cost divided by the days late, which shows what invoicing one day sooner is worth over a year. The delay comes on top of your payment terms, not instead of them, so the full wait for your money is the days late plus the days your terms allow.
Worked example
A contractor bills $20,000 a month and usually invoices 12 days after finishing the work. An average day's billings is $20,000 divided by 365 / 12 days, about 30.4, which is $657.53, so 12 days of delay keeps $7,890.41 tied up. Financing that at 12% costs $947 a year, or $79 for each day of delay.
| Line | Amount |
|---|---|
| Billings a month | $20,000.00 |
| Average day: $20,000 / (365 / 12) | $657.53 |
| Cash tied up: 12 days of billings | $7,890.41 |
| Financing cost a year at 12% | $947 |
| Cost a year of each day's delay | $79 |
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