Trade Credit Term Charge Calculator
Calculate the term charge on a credit sale using an annual or monthly rate; see the charge, the total and the period rate.
Things to keep in mind:
- Legal limits on term-charge rates (e.g. for instalment sales to consumers under consumer protection rules) are not checked; look at the regulation for consumer sales.
- Compound interest, late-payment interest and default provisions are not modelled.
- The term-charge invoice and VAT/withholding consequences must be assessed separately.
Calculator
Result
Enter the values and press Calculate to see the result here.
About this tool
On a credit sale the seller may charge the buyer a term charge (an interest-like amount) on top of the cash price. This tool calculates the charge and total payable from an agreed annual or monthly rate.
Formulas
- Annual rate: Term charge = Amount × Rate × Days / (100 × Day basis), basis 360 or 365
- Monthly rate: Term charge = Amount × Rate × Days / (100 × 30)
- Total = Amount + Term charge
- Period rate = Term charge / Amount × 100
Example: TRY 10,000, 36% a year, 30 days, 360-day basis: 10,000 × 36 × 30 / 36,000 = TRY 300 term charge; total TRY 10,300. With a 3% monthly rate for 45 days: 10,000 × 3 × 45 / 3,000 = TRY 450.
Simple interest is used; no compounding. A separate invoice is issued for the term charge and VAT applies; use the VAT on term-charge invoice tool. Results are before VAT.
How to read the result
"Period rate" is the total percentage added to the cash price over the term; the same annual rate turns into a higher period rate for a longer term. When comparing offers keep the annual rate and the day basis (360 or 365) the same: a 360-day basis gives about 1.4% more term charge at the same rate. If a cash discount is offered, compare it with the term charge using the early payment discount return tool.
How to use
- Enter the credit sale amount.
- Choose whether the rate is annual or monthly and enter it.
- Enter the term in days; for an annual rate choose the 360 or 365 basis.
- Press Calculate.
Notes
Simple interest is used. Amounts are rounded HALF_UP to two decimals. A month counts as 30 days for a monthly rate. Results are before VAT.
Sources
Frequently asked questions
Amount × rate × days / (100 × day basis) using simple interest. For a monthly rate the basis is 30.
Follow your agreement. Both are used in trade practice; the difference is small but visible on large amounts.
Yes; it forms part of the VAT base of the underlying supply and follows its VAT rate. Use the VAT on term-charge invoice tool to calculate it.
With a monthly rate days are divided by 30, so 3% a month equals 36% a year simple on a 360-day basis.
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