Late Payment Interest Calculator + Demand Letter
A client hasn't paid in months? The debt isn't standing still. See how much late-payment interest has accrued under Israel's Adjudication of Interest and Linkage Law, whether you've reached the Small Claims stage, and generate a formal demand letter — the step that shakes most payments loose long before a courtroom.
The debt
Interest is simple (never compounded) per the Adjudication of Interest and Linkage Law — the Bank of Israel rate plus the statutory margin.
Small Claims Court — is it time?
A conservative read: the court expects you to have exhausted ordinary collection and sent a formal demand letter first.
- •טרם נשלח מכתב דרישה רשמי - חובה לשלוח לפני הגשת תביעה
- •שלח מכתב דרישה בדואר רשום (שמור את אישור המסירה)
Small-claims ceiling: ₪39,900.00. The fee is 1% of the claim (minimum ₪50).
Demand letter
A formal demand letter is almost always a precondition — and on its own it is what shakes most payments loose. The letter is generated in Hebrew, as it is addressed to an Israeli debtor.
Fill in your business name and the debtor's name to generate the letter.
This is an estimate, not legal advice. Interest rates, the Small Claims ceiling and court fees are revised periodically, and an agreement between the parties overrides the statutory default. Consult a lawyer before starting proceedings.
How it works
- •Simple interest, never compounded. Since Amendment 9 (2025), statutory interest doesn't accrue on itself. The calculation here is the Bank of Israel rate plus the statutory margin, applied to actual days late.
- •Demand letter first, claim second. The court expects evidence that you tried to collect. A registered letter with a delivery confirmation is that evidence — without it, a claim looks hasty.
- •The Small Claims ceiling. Above it you can't use Small Claims Court and need the Magistrate Court with representation — at which point it's worth asking whether the amount justifies the legal fees.
- •Interest is not part of the invoice. Late interest isn't consideration for a service, so it never goes on the tax invoice. You demand it in the letter and the claim, separately from the principal.
Frequently asked questions
How much late-payment interest can I charge an Israeli client?
Absent an agreement, the Adjudication of Interest and Linkage Law sets interest at the Bank of Israel rate plus a fixed statutory margin. Since Amendment 9 took effect on January 1, 2025, this is simple interest only — it does not compound. If your contract sets an agreed late-payment rate, that rate governs instead.
When should I file a Small Claims case over an unpaid invoice?
Generally after ordinary collection has been exhausted and a formal demand letter has been sent — in practice around 90+ days overdue. The amount must also sit under the Small Claims ceiling, and you need the original invoice plus correspondence documenting the order. Filing too early, with no demand letter, reads as hasty to the court.
Can I add late interest to the tax invoice?
No. Late-payment interest isn't consideration for goods or services, so it doesn't belong on a tax invoice and isn't subject to VAT as part of one. You claim it in the demand letter and the statement of claim, separately from the principal.
What must a demand letter contain?
The creditor's and debtor's details, precise identification of the debt (invoice number, date, amount), a breakdown of accrued interest, a final payment deadline (typically 14 days), and a statement that legal proceedings will follow if payment isn't made. Send it by registered mail and keep the delivery confirmation.
What does filing a Small Claims case cost?
The fee is 1% of the claim, with a ₪50 minimum. No lawyer is needed — that's the point of the forum — and a hearing is usually scheduled within a few months.
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