An interest rate is the cost of borrowing money or the reward for having money in the bank. When a business or individual borrows money from a bank, finance company or other lenders, interest is paid as compensation for the risk and for the capital provided by the lender.
A distinction is typically made between:
- Deposit rate - the interest you get from money deposited into an account.
- Lending rate - the interest you pay when you borrow money.
Interest rates and company liquidity
Renter spiller en central rolle i virksomhedernes økonomi. De påvirker både finansieringsomkostninger og den afkastning, man kan opnå på indestående midler. Samtidig kan renter også blive relevante i forbindelse med forsinkede betalinger, hvor en virksomhed har ret til at kræve renter af ubetalte fakturaer i henhold til renteloven.
For businesses, it's important to have clear payment terms to protect against losses and send a clear signal to customers about when interest can come into play.
Legislation on late payment interest
According to the Interest Act, a company can charge interest when an invoice is not paid on time. The interest rate is a reference rate - the National Bank's lending rate on January 1 or July 1 - plus a surcharge of 8%.
Example: If the National Bank's lending rate is 3%, a company can charge 11% interest on the amount due.
As a general rule, the following applies:
- Interest can be calculated from the due date.
- If no due date has been agreed, interest can only be claimed 30 days after the invoice has been sent.
- In B2B (business-to-business) relationships, interest can usually be charged 30 days after the due date, unless otherwise agreed in advance.
Obsolescence of interest
Interest is generally time-barred after three years. However, if the interest has been recognized in an agreement, a promissory note or a judgment, a longer limitation period of ten years applies.
Why is interest rate knowledge important?
For businesses, interest rates are not just about financing, but also about risk management and credit policy. A good overview of interest rates and payment deadlines contributes to healthy liquidity and reduces the risk of losses on customers.
With Qatchr, businesses can strengthen their credit policy and reduce the need to manage interest on late payments through credit lookups, credit monitoring and data washing.
