1. What is a DPD Cost Calculator?

Definition: This calculator estimates the cost of Days Past Due (DPD) for credit or late payments in the UK.

Purpose: It helps businesses and individuals understand the financial impact of late payments based on agreed rates.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( \text{Cost} \) — Late payment cost (£)
• \( \text{Amount} \) — Outstanding amount (£)
• \( \text{Rate} \) — Agreed annual rate (decimal)
• \( \text{DPD} \) — Days past due

Explanation: The formula calculates the proportional cost of late payment for the given number of days.

3. Importance of DPD Cost Calculation

Details: Accurate DPD cost calculation ensures proper compensation for late payments and helps in financial planning.

4. Using the Calculator

Tips: Enter the outstanding amount in £, annual rate (default 0.05 for 5%), and days past due (default 30). All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical late payment rate in the UK?
A: The UK Late Payment legislation suggests 8% plus Bank of England base rate for business-to-business transactions.

Q2: Does this include statutory interest?
A: This calculates the cost based on your agreed rate. For statutory rates, use 0.08 (8%) plus the current base rate.

Q3: Can I use this for personal loans?
A: Yes, if you know the annual interest rate and days overdue, this calculator works for any late payment scenario.

Q4: Why divide by 365?
A: This converts the annual rate to a daily rate for the exact number of days late.

Q5: Should I add VAT to the calculated cost?
A: Late payment compensation is typically exempt from VAT, but consult your accountant for specific cases.