How to calculate 2% bank interest rate daily

[Sphesihle]

Good day. I run a Plant Hire company and deal with invoicing different clients every month. At times we have late paying clients and we need to add interest of 2% every second day of the month for everyday on late payment. I would like your assistance and teach me on how to calculate at 2% interest rate daily. Thank you!

 

[keithmct]

why do you want to add the interest every second day? am I correct in saying you want it to compound the interest? eg $100 + 2% = $102, wait one day, $102 +2% etc

 

[Sphesihle]

Hi Keith. This is the original payment due. According to my client agreement, it goes like this: Payment shall be effected monthly in advance and shall be due on or before the 1(first) day of each month, without set off or deduction. Interest shall be charged on late payment at 2% above prime banking rates from the 2nd day of the month until date of payment.TAX INVOICE TCP-BTT 003<o></o>
DESCRIPTION UNIT QUANTITY UNIT PRICE AMOUNT<o></o>
Hire of Excavator @ Hour 54 R400.00 R21 600.00
<o></o>
Sub Total R21 600.00
Vat R 3024.00
TOTAL R24 624.00<o></o>
Diesel R 3 400.00<o></o>
TOTAL R28 024.00

 

[keithmct]

Is 2% the annual interest rate?
as the formula for interest is I=PRT/100 being Principle x Rate x time divided by 100, In cell A1 type
=TODAY()
in cell A2 type the date when the hire cost became overdue e.g. 2 October 2014
in cell A3 type 28024.00
in cell A4 type the interest rate 2%
in cell A5 type
=A3*(A1-A2)*A4/365
being: principle x number of days overdue x 2%.
As per your figures, 21 days interest would be R32.24. Does that sound correct?

 

[Sphesihle]

Thanks buddy. I will try using this format and get to back to you shortly.