The invoice is late. Interest is running.

NY CPLR § 5004

Two sources of interest, one of which you already have.

When a New York business invoice goes unpaid, interest can come from one of two places. The first is your contract: a clause in your terms, proposal, or purchase order that says what happens when payment is late. The second is the statute: when the contract is silent, New York supplies a rate by law. Most small and mid-size businesses have never negotiated the first, which means the second is doing the work whether they know it or not.

Either way, the interest is not a penalty you are inventing. It is compensation the law recognizes for being deprived of money you were owed. Stating it accurately is one of the most effective things a demand letter does, because it converts “please pay” into “the balance is $27,384.62 and rises $6.16 a day.”

The statutory rate: 9% per year.

CPLR § 5004 sets New York's statutory interest rate at 9% per year. A 2022 amendment lowered the rate to 2% for certain judgments on consumer debt against individuals, but that carve-out does not apply to business-to-business receivables. For a company collecting from a company, 9% is the number.

In a contract case, New York law also allows that interest to run before judgment, from the earliest date the claim existed. For an invoice, that is ordinarily the due date stated on the invoice or, if none, a reasonable time after delivery. Interest then accrues through the date of judgment and continues afterward until the judgment is paid. The 9% is simple interest, computed on the principal, not compounded.

How to compute statutory interest.

The formula is simple: principal × 0.09 × (days late ÷ 365). Some worked examples:

• $12,000 invoice, 200 days late. $12,000 × 0.09 × (200 ÷ 365) = $591.78. Daily accrual: $2.96.
• $48,500 invoice, 14 months (426 days) late. $48,500 × 0.09 × (426 ÷ 365) = $5,094.45. Daily accrual: $11.96.
• Three invoices of $8,000 (300 days), $8,000 (240 days), and $8,000 (180 days). Compute each separately: $591.78 + $473.42 + $355.07 = $1,420.27. Interest runs from each invoice's own due date, not from the last one.

If the customer made partial payments, apply each payment as of its date, then compute interest on the reduced balance going forward. A clean schedule showing invoice dates, due dates, payments, and interest per line is what we attach to the letter, and it is what a court will want later.

Contractual interest and late fees.

If your terms say “1.5% per month on overdue balances” or “a late fee of $50 plus 18% per annum,” that clause generally controls instead of the statutory rate, provided the customer actually agreed to it. A rate buried in fine print on an invoice the customer never signed is the weakest version; a rate in a signed agreement or an accepted proposal is the strongest. Courts enforce agreed rates between businesses routinely, and 1% to 1.5% per month (12% to 18% a year) is common in New York commercial terms.

Two cautions. First, a flat late fee that bears no relationship to your actual loss can be attacked as a penalty rather than compensation; modest fees tied to administrative cost are safer than large ones. Second, interest is capped by New York's usury laws, discussed next. Between the two, a conservative contractual clause in the low teens, clearly agreed to, is the one that gets enforced without argument.

Usury: the ceiling on what you can charge.

New York limits how much interest a lender can charge, and a seller who extends credit on an invoice can be treated as a lender for this purpose. The state has a civil usury limit and a higher criminal usury limit. We are deliberately not quoting section numbers here, because the rules have exceptions that depend on who the borrower is and how the deal is structured, and misapplying them is costly.

The practical guidance for an ordinary B2B invoice:

• A contractual rate of 1% to 1.5% per month is well within the limits that apply between businesses.
• Corporate borrowers in New York generally cannot raise the civil usury defense, but the criminal usury ceiling still applies to everyone. Do not assume a corporate customer means no limit.
• Charges that are really disguised interest (large “late fees,” “service charges” that scale with the balance and time) can be added up by a court and tested against the ceiling.
• If your terms call for a rate above roughly 2% a month, or layer fees on top of interest, get the clause reviewed before you demand it. An unenforceable interest clause can, in the worst case, jeopardize the interest claim entirely.

When in doubt, demand the statutory 9%. It is never usurious, it is never a penalty, and it is available without any clause at all.

Which rate should the letter demand?

If your contract has a valid, clearly agreed rate higher than 9%, the letter demands the contractual rate and cites the clause. If the contract is silent, or the clause is doubtful, the letter demands 9% under CPLR § 5004 from each invoice's due date. We do not demand both, and we do not stack a late fee on top of statutory interest unless the contract plainly provides for it. Overreaching on interest is the fastest way to give a debtor's lawyer something to argue about, and it distracts from the principal, which is the point.

The same calculation applies whether the debt is a single invoice or a running account. If the debtor has gone silent on a series of invoices, the statement of account attached to the letter also supports an account stated claim, which is why the letter shows interest per invoice rather than one lump.

What a demand letter does here.

Interest is where a demand letter earns its keep. Ours states the principal, the interest basis (the contract clause or CPLR § 5004), the accrual start date for each invoice, the accrued interest through the letter date, and the daily rate going forward. It then sets a deadline. The debtor's accounts-payable manager now has a document showing that waiting thirty more days costs a specific dollar amount, and a lawyer's signature confirming it will be claimed in court.

That reframing is what moves the file. A vague reminder is a cost of doing business. A computed, accruing claim from a New York attorney is a liability that needs to be closed. Our letters are sent for a flat fee; the interest you recover on a mid-size receivable frequently exceeds it. For the broader strategy, including the choice between a letter and a collection agency, see the commercial collections hub and agency vs. attorney letter.

Interest after judgment and in small cases.

If the matter goes to court and you win, the judgment includes prejudgment interest through the judgment date, and interest keeps running on the judgment at the statutory rate until it is paid. In the commercial claims part, the court can award interest too, though the dollar limits are modest; see commercial small claims in New York. On a small invoice, the interest may be a few hundred dollars and the principal is what matters. On a $50,000 receivable that has aged eighteen months, the interest alone is roughly $6,750, and ignoring it is leaving money on the table.

One last point: interest does not extend your deadline to sue. The limitations period runs from the due date regardless of how much interest accrues. See statute of limitations for unpaid invoices.