Interest on overdue invoices in South Africa: what you can charge

You can charge interest on an overdue invoice, but how depends on who you invoice and what you agreed before the work. If your terms are silent, the law's default is the prescribed rate: the repo rate plus 3.5 percentage points, which is 10.50% a year now and 10.75% from 1 November 2026. For a private customer, a late-payment rate must have been disclosed and accepted before you did the work, and it is capped at 2% a month.

On this page: the short answer · the prescribed rate · when interest starts · private customers · wording for your terms · an example · limits · should you charge it? · questions

The short answer

The National Credit Act applies to agreements with a consumer. That includes individuals. It does not apply where the customer is a company or other juristic person whose assets or turnover, with its related companies, reach a threshold the Minister sets. If you are not sure which side a customer falls on, treat them as a consumer and disclose the rate up front.

The prescribed rate

The Prescribed Rate of Interest Act sets a default annual rate: the Reserve Bank's repo rate plus 3.5 percentage points. It applies only where no other law, agreement or trade custom sets the rate. A new rate starts on the first day of the second month after the Reserve Bank changes the repo rate, and a debt generally keeps the rate that was in force when its interest began to run.

The Reserve Bank raised the repo rate to 7.25% on 25 September 2026, which is how the 1 November figure is reached. The Minister of Justice publishes the rate, but law-firm commentary notes the notices are not always published on time, so check the Department of Justice or the Reserve Bank for the current figure.

When interest starts to run

• An invoice for an agreed amount is a fixed sum owed. Interest generally runs from the day it became due.
• Sources differ on whether a written demand is needed before the prescribed rate runs. A clear written demand removes the doubt: state the amount, the invoice, the due date and that interest is being charged.
• A debt that is not a fixed amount (a damages claim, for example) carries interest from the earlier of a demand or a summons.
• A court judgment for money bears interest from the day it becomes payable, unless the order says otherwise.

Private customers: the National Credit Act

Homeowners and other individuals are consumers. When you give them an account with time to pay, and a fee or interest becomes payable if they pay late, the Act calls it an incidental credit agreement. Three things follow, from the Act and its regulations.

1. Disclose before you start. Section 5 says you may charge or recover interest or a fee on the unpaid amount only if you disclosed it, and the consumer accepted it, on or before the date the goods or services were supplied.
2. The cap is 2% a month. Regulation 42 sets the maximum for incidental credit agreements at 2% per month, and says it must be disclosed as a monthly rate.
3. Debt-enforcement rules can apply. The Act applies its debt-enforcement chapter to incidental credit, and section 129 says a credit provider may not start legal proceedings to enforce an agreement without first giving the consumer a written notice. Ask an attorney or the clerk whether you need that notice before you issue a summons.

The easiest way to meet the first point is to put the late-payment rate on the quote the customer accepts. Zuvo records the name a client typed and when they accepted a quote online, so you have a record that the terms were seen and accepted before the work.

Wording for your terms

Add this to the payment terms on your quote and your invoice, and fill in the blanks. For a private customer use the monthly rate, not above 2%.

PAYMENT TERMS (quote and invoice)

Payment is due [14] days from the invoice date.

Late payment: accounts not paid by the due date bear interest
at [x]% per annum / [y]% per month, calculated daily from the due
date until the account is paid in full. [Private customers: state
the rate as a monthly rate, not above 2% per month.]

An example

A business customer owes R10,000 on an invoice that is 30 days overdue, and you agreed no rate. At the prescribed rate of 10.75% a year, simple interest for 30 days is R10,000 × 10.75% × 30 ÷ 365, which comes to R88.36.

For a private customer who accepted a rate of 2% a month before the work, a month of interest on the same amount is R200. That is the most the regulations allow for that month.

Limits to know

• In duplum. Interest stops running once the unpaid interest equals the original debt.
• No interest on interest. Interest generally cannot itself attract interest.
• The agreed rate rules. The prescribed rate is only the default. Where you agreed a rate, that is the one, subject to the National Credit Act for consumers.
• Tax. Ask your accountant how interest you charge is treated for VAT and income tax. This guide does not cover it.

Should you charge it?

Interest is most useful as a reason to pay on time, not as income. A line in your terms saying late accounts bear interest changes how clients rank your invoice among their bills. Many tradespeople never enforce it, and waive it when a client pays quickly after a polite reminder. Pick the approach you will actually follow, put it in your terms before the work, and send reminders before the amount grows.

If an invoice still goes unpaid, a written demand and, for amounts up to R30,000, the Small Claims Court are the next steps. A claim for interest does not count towards that limit. See how to recover an unpaid invoice in the Small Claims Court.

Questions people ask

How much interest can I charge on an overdue invoice in South Africa?

It depends on who you invoice and what you agreed. For a business customer, the rate in your agreed terms applies. If nothing was agreed, the default is the prescribed rate, which is the Reserve Bank repo rate plus 3.5 percentage points: 10.50% a year until 31 October 2026 and 10.75% from 1 November 2026. For a private customer, a late-payment rate must have been disclosed and accepted before you did the work, and the National Credit Regulations cap it at 2% a month.

What is the prescribed rate of interest?

It is the default annual rate under the Prescribed Rate of Interest Act: the repo rate plus 3.5 percentage points. It applies only where no other law, agreement or trade custom sets a rate. A new rate starts on the first day of the second month after the Reserve Bank changes the repo rate, and a debt generally keeps the rate in force when its interest began to run.

Can I charge interest if it was not on my quote or invoice?

For a business customer, the default prescribed rate can still apply to a debt for a fixed amount, though sources differ on whether a written demand is needed to start the clock, so send one. For a private customer, the National Credit Act says interest on an unpaid account may be charged only if you disclosed it, and the customer accepted it, on or before the date the work or goods were supplied.

What is the maximum interest on a late invoice to a private customer?

Under Regulation 42 of the National Credit Regulations the maximum for incidental credit agreements is 2% a month, and the rate must be disclosed as a monthly rate. An invoice with a late-payment charge to a consumer can count as an incidental credit agreement.

Does interest count towards the Small Claims Court limit?

No. The Small Claims Courts Act says a claim for interest, costs or other relief is not counted when working out whether a claim is within the limit, which is R30,000 from 1 August 2026.

What is the in duplum rule?

It is a common-law rule that interest stops running once the unpaid interest equals the amount of the original debt. It means a long-overdue invoice cannot keep growing without limit.

Related: Small Claims Court and unpaid invoices · How to follow up on a late invoice · Invoice example and free template · Charging more than your quote · Client statements of account

Sources read for this guide: the Minister's Government Notice 3887 of 2026 (10.25% from 1 March 2026), the government's report of the September 2026 repo rate decision, law-firm summaries from Deneys and Rateweb, the National Credit Act 34 of 2005 (sections 4 and 5, and 129), the National Credit Regulations (regulation 42) and the Small Claims Courts Act. The text of the Prescribed Rate of Interest Act was not available to me in readable form, so what is said about it comes from those summaries. General information, not legal advice. Ask an attorney about a specific debt.