Why default interest matters in B2B relationships
Late payments between businesses erode the liquidity of Swiss SMEs more than many realise: every overdue invoice ties up working capital, increases financing needs and lengthens collection cycles. When a business customer fails to pay within the agreed terms, the creditor is not obliged to accept the delay passively: Swiss contract law provides for statutory default interest and, in commercial matters, the possibility of claiming compensation for additional damages.
Unlike relationships with consumers, in B2B the parties enjoy broad contractual freedom regarding payment terms and default conditions. However, in the absence of specific clauses, the supplementary rules of the Code of Obligations (CO) apply, with a statutory rate of 5% per annum and calculation methods established by case law.
This guide explains when the right to interest arises, how to calculate and invoice it correctly, its impact on accounting and VAT, and how to structure an effective reminder process — with references updated to 2026 and typical practices of SMEs using Accountex to manage receivables and period-end closings.
Legal framework: interest, default and commercial relationships
Invoices between businesses generally fall within commercial transactions (Handelsgeschäft). Here are the essential references under federal law:
| Aspect | Applicable rule | Practical B2B note |
|---|---|---|
| Statutory default rate | Art. 104 para. 1 CO — 5% per annum | Also applies if the contract provided for a lower agreed rate |
| Higher contractual rate | Art. 104 para. 2 CO | If agreed (including by reference to bank rates), it also applies in default |
| Elevated commercial rate | Art. 104 para. 3 CO | Between merchants, if the ordinary bank discount rate at the place of payment exceeds 5%, that rate may be applied |
| Start of default | Art. 102 CO | With a fixed due date: automatic default on the following day; otherwise a demand for payment is required |
| Aggravated liability | Art. 103 CO | In default, the debtor is also liable for fortuitous loss of the monetary debt |
| Compound interest | Art. 105 para. 3 CO | Interest on accrued default interest may not be claimed |
| Further damages | Art. 103 and 106 CO | Reminder and debt recovery costs, if justified and documented |
| Limitation | Art. 127 and 133 CO — 10 years | The principal claim prescribes after ten years; default interest follows the same fate (art. 133 CO) |
At federal level there is no maximum B2B payment term as under the European directive on commercial late payments: terms remain negotiated between the parties. Manifestly abusive terms may nevertheless be challenged in particular cases (for example under the Unfair Competition Act, UCA).
When default applies to a B2B invoice
Default interest does not run from the date the invoice is issued, but from the debtor's default. This distinction is decisive for the calculation:
Agreed or invoice-stated due date
If the invoice states "30 days net", "payable by 31.03.2026" or an equivalent agreed term, default arises automatically on the day after the due date (art. 102 para. 2 CO). No formal notice is required for interest to start accruing.
Best practice: always state an explicit due date on the invoice and align it with the general terms and conditions or framework contract.
No fixed payment term
In the absence of a due date, the debtor enters default only after a demand for payment by the creditor (art. 102 para. 1 CO): written reminder, email, registered letter or other act that clearly expresses the expectation of payment.
Interest runs from the date of the demand, not from the delay as perceived by the creditor.
Collateral effects of default
- •The risk of loss of the claim passes to the debtor (art. 103 CO): even a fortuitous event after default does not release them from payment.
- •The creditor may suspend their own outstanding performance (exception of non-performance, art. 82 CO) if the relationship is synallagmatic.
- •In debt enforcement proceedings (Betreibung), interest continues to accrue until actual payment.
Statutory calculation of default interest
The calculation follows the simple interest rule, without capitalization (compound interest prohibited by art. 105 para. 3 CO). In Swiss commercial practice, the 360-day commercial year is frequently used:
Interest = Principal × Annual rate × Days in default ÷ 360
The principal corresponds to the total amount still owed on the invoice (as a rule including VAT, unless otherwise agreed). If the debtor has made a partial payment, interest is calculated on the remaining balance.
Numerical example
| Parameter | Value |
|---|---|
| Outstanding invoice amount | CHF 18'500.00 |
| Due date | 15 January 2026 |
| Payment date | 31 March 2026 |
| Days in default | 75 (16 Jan – 31 Mar) |
| Statutory rate | 5% per annum |
| Interest due | CHF 18'500 × 0.05 × 75 ÷ 360 = CHF 192.71 |
If the contract provides for a rate of 8% per annum, the same calculation with a rate of 0.08 produces CHF 308.33. The applicable rate is always the one most favourable to the creditor among the statutory rate, the contractual rate and — between merchants — the ordinary bank discount rate if it exceeds 5%.
Round interest to two decimal places and document in the spreadsheet: invoice number, remaining principal, default start date, end date (payment or interest invoice date), rate and formula used.
Invoicing, reminders and recovery costs
Issuing an interest debit note
Default interest is charged with a separate document or an additional line on the original invoice, after default has been established and the amount calculated. The document must clearly indicate that it concerns default interest (not an ancillary service), with reference to the principal invoice, the calculation period and the rate applied.
A QR invoice is not mandatory for interest amounts, but for accounting consistency it is advisable to issue a numbered document in the invoice register, especially if the amount exceeds internal approval thresholds.
Recommended reminder process
| Stage | Content | Interest and costs |
|---|---|---|
| 1st reminder | Friendly follow-up, administrative check | Normally without charges |
| 2nd reminder | Final payment deadline (e.g. 10 days) | State that statutory interest is accruing |
| 3rd notice / formal default | Notice of legal action or debt enforcement | Interest + possible Verzugsschaden |
| Interest note | Document with detailed calculation | Issued after payment of the principal or concurrently |
Verzugsschaden: beyond interest
Statutory interest compensates the generic financial damage of the delay. Additional costs — internal administrative time, debt collection agency fees, postage, bank charges — fall under damages for breach of contract (Verzugsschaden, art. 103 and 106 CO) and must be claimed separately, documented and kept proportionate to the claim. Industry reference tables (for example those promoted by Inkasso Suisse) indicate indicative maximum amounts, but are not legally binding: the court verifies reasonableness on a case-by-case basis.
VAT and accounting impact
VAT treatment
Default interest is not a taxable supply under the VAT Act: it represents compensation for delay in payment of a monetary debt, not consideration for a supply of goods or services. The debit note must be issued without VAT.
Take care not to confuse default interest with payment fees, administrative handling charges or contractual penalties that constitute consideration: the latter may be taxable if they constitute an independent supply.
Accounting on the creditor side
- •On accrual: debit receivables vs. financial income (e.g. account 6940) or, if individually immaterial, record on receipt of payment.
- •On receipt: debit bank vs. receivables; verify matching with the open item of the original invoice.
- •Period-end closing: recognize accrued but not yet invoiced interest if material for the accrual principle (Swiss GAAP FER / OR).
Accounting on the debtor side
The late-paying customer records charged interest as financial expense (e.g. account 6945) on receipt of the document or on payment, depending on the accounting policy adopted. If the note does not include VAT, the amount is fully deductible for income tax purposes, subject to general expense deductibility limits.
For both parties, retain the attached calculation and the reminder document that records the start of default: in the event of an audit or dispute, traceability of the calculation period is essential.
Contractual clauses and prevention
Including payment conditions in framework contracts or general terms and conditions reduces uncertainty and strengthens the creditor's position:
- 1Payment term: explicitly state "30 / 45 / 60 days net from invoice date" and the start date from which it runs.
- 2Default rate: a rate higher than the 5% statutory rate may be agreed (art. 104 para. 2 CO), but not lower than the statutory minimum in case of default.
- 3Reminder costs: provide a flat amount for administrative recovery costs, provided it is not manifestly disproportionate.
- 4Retention of title: for goods supplies, consider a retention of title clause until full payment, including any ancillary amounts.
Regularly monitoring receivables aging (overdue 0–30, 31–60, 61–90, over 90 days) allows intervention before accumulated interest and recovery costs erode the margin on the transaction.
Managing interest and overdue receivables with Accountex
Integrated accounting software such as Accountex simplifies the entire cycle: from invoicing with automatic due dates to monitoring open items, through to recording accrued interest. Here is a typical operational workflow for an SME:
- Issue B2B invoice with due date and payment terms visible in the PDF.
- Weekly review of the "overdue receivables" report and send reminders from the configured template.
- On partial payment, close the remaining open item and automatically or manually recalculate interest on the outstanding principal.
- Issue interest debit note (without VAT) linked to the original invoice.
- Accounting entry on financial accounts and bank reconciliation of the final payment.
For trust firms assisting multiple clients, standardizing the reminder process and the accounting treatment of interest reduces the risk of errors in monthly closings and ensures consistency across mandates.
Operational checklist
- ✓Does the invoice show a clear payment due date aligned with the contract?
- ✓Is the default start date documented (due date exceeded or date of demand for payment)?
- ✓Is the rate applied (statutory, contractual or commercial) verified and stated in the calculation?
- ✓Is the interest note issued without VAT and with reference to the original invoice?
- ✓Are recovery costs distinguished from interest and justified with documentation?
- ✓Is the accounting (creditor or debtor) consistent with the accrual principle adopted?
- ✓Is the reminder process documented for a possible debt enforcement proceeding?