Late payment interest calculator for FIDIC 14.8 financing charges.

How It Works

How FIDIC financing charges work on a late payment

When an employer pays a certified amount late, FIDIC Sub-Clause 14.8 entitles the contractor to financing charges on the unpaid sum. They compound monthly from the date payment was due until the day it arrives. No claim notice is needed, and no certificate either. The problem is rarely entitlement. It is that nobody puts the number in front of the employer.

What Sub-Clause 14.8 [Delayed Payment] says in the 1999 and 2017 editions

The 1999 Red, Yellow and Silver Books charge three percentage points above the discount rate of the central bank in the country of the currency of payment. The Particular Conditions can substitute another rate. The contractor is entitled to the charges without formal notice or certification, and without prejudice to any other right or remedy. The text gives no fallback where that central bank publishes no discount rate, which is a gap worth closing at tender.

The 2017 edition keeps the three-point margin and the monthly compounding but changes the base rate. It becomes the average bank short-term lending rate to prime borrowers for the currency of payment at the place for payment. Failing that, it is the same rate in the country of that currency, and then the rate fixed by that country's law. It also makes clear that the Sub-Clause 20.2 claims procedure does not apply, so no 28-day notice is needed to keep the charges alive.

When the clock starts

The period of delay is deemed to start on the date for payment under Sub-Clause 14.7, irrespective of when the interim certificate is actually issued. For an interim certificate that date is 56 days after the Engineer receives the Statement and supporting documents, unless the contract sets another period. A late certificate does not move the start date, so every day the employer's approval process absorbs is a day on the meter. Our guide to interim payment certificates walks through the valuation cycle behind those dates.

Sub-Clause 14.8 bites on payment, not on valuation. If the Engineer certified less than your Statement claimed, the gap is a separate argument. The steps are set out in what to do when an interim payment is certified short.

How the calculator compounds

FIDIC says the charges are compounded monthly but does not fix a day-count convention. The calculator treats each month after the date for payment as one period at one twelfth of the annual rate. Each charge joins the balance, and a final part month is pro-rated by days. On QAR 3.75 million at 7.5% a year, the first month adds QAR 23,437.50. The second adds QAR 23,583.98, because it also charges on the first month's charge. If the reference rate changed during a long delay, run the first stretch up to the date the rate changed, then enter its total due as the amount unpaid for the next stretch, starting on that date, at the new rate, so the earlier charges keep compounding instead of being dropped. The calculator assumes a single sum paid in full on one date. For several unpaid certificates or a part payment, run each unpaid tranche separately from its own date for payment.

Financing charges, suspension and termination

Financing charges compensate the delay. They do not end it. Under the unamended Sub-Clause 16.1, the contractor may suspend work or reduce the rate of work after giving not less than 21 days' notice. The suspension does not prejudice the financing charges. If a certified amount is still unpaid 42 days after the time for payment expires, Sub-Clause 16.2 (16.2.1 in 2017) opens a right to terminate by notice. Both are heavy instruments with strict formalities, and a defective notice can make the contractor the party in breach. The guide to remedies for non-payment by a main contractor covers the same suspension and notice discipline one tier down the supply chain.

If your contract uses FIDIC's 2022 reprint of the 2017 Red, Yellow or Silver Book, a further lever applies. New Sub-Clause 21.4 deems a Dispute to have arisen where financing charges remain unpaid 28 days after the contractor requests them, referable to the DAAB without a Notice of Dissatisfaction.

When the Particular Conditions change the answer

Everything above assumes the General Conditions survived negotiation. In the GCC and many other markets they often do not. Employer-drafted Particular Conditions regularly reduce the margin, substitute a fixed rate, cap the charges or delete Sub-Clause 14.8 altogether. The governing law matters too, because some legal systems restrict charges that resemble interest. A clause can be standard FIDIC and still be absent from your contract. Read the executed Particular Conditions first, then use the custom rate option to model what they actually say.

In CALIM's experience across dozens of engagements, the contractors who recover financing charges are the ones who price them in every Statement, not at final account. At CALIM, we track certified sums against their payment dates through our commercial management service for SME contractors, so late money is priced on the day it becomes late.

Late payment is only free when nobody does the arithmetic.

Questions Contractors Ask

Late payment interest, answered.

This calculator applies the arithmetic of FIDIC Sub-Clause 14.8 to the inputs you enter. It is general information, not legal advice, and no consultant-client relationship arises from its use. Entitlement depends on your executed contract, any amendment to the payment and suspension clauses, the facts, and the governing law. Take professional advice before relying on any figure or serving any notice.