Trade receivables and payables (settlements for supplies and services) are among the most important factors affecting the liquidity of every business. In practice, business partners often fail to pay on time, which makes it necessary to charge late payment interest. Presenting this interest correctly in the balance sheet is key to the reliability of the financial statements and to compliance with the accounting standards that apply in Poland.
Interest on trade settlements is charged because of late payment for goods supplied or services performed. Recognising it correctly in the accounting books and presenting it in the balance sheet requires knowledge of the legal rules on charging interest and of the accounting standards that set out how it is measured and presented in the financial statements. Interest can also come from invested cash — we explain how it is recognised when discussing term deposits in the balance sheet.
Legal basis for charging interest on settlements
The rules for charging interest on supplies and services are set out in detail in the Civil Code (Kodeks cywilny) and in the Act on Counteracting Excessive Delays in Commercial Transactions. Which rules apply depends mainly on whether the sale is made to a private individual who does not run a business or to another business.
The Civil Code and the Act on Counteracting Excessive Delays in Commercial Transactions are the legal basis for charging interest on receivables. Which rules apply depends on the legal status of the business partner and the nature of the transaction
Where payment for goods or services sold to a private individual who does not run a business is late, the basis for charging interest is Article 481 of the Civil Code. Under this provision, if a debtor is late in paying a sum of money, the creditor may claim interest for the period of delay, even if it has suffered no loss and even if the delay results from circumstances for which the debtor is not responsible.
If the late payment interest rate was not set in the contract, statutory late payment interest is due at a rate equal to the sum of the National Bank of Poland (NBP) reference rate and 5.5 percentage points (Article 481 § 2 of the Civil Code; with the reference rate of 3.75% in force since 5 March 2026 – 9.25% per year). Where the claim bears interest at a higher rate, the creditor may claim late payment interest at that higher rate.
The maximum late payment interest may not exceed, per year, twice the statutory late payment interest. If this limit is exceeded, only the maximum late payment interest is due under the Civil Code
Interest in transactions between businesses
Different rules apply to transactions between businesses within the meaning of the Entrepreneurs' Law (Prawo przedsiębiorców) or other entities listed in Article 2 of the Act on Counteracting Excessive Delays in Commercial Transactions. In such cases, statutory late payment interest in commercial transactions is charged under Article 4 point 3 of that Act.
Under this provision, statutory late payment interest in commercial transactions means interest at a rate equal to the sum of the NBP reference rate and 10 percentage points. The exception is commercial transactions in which the debtor is a public entity that is a healthcare provider – in that case the interest equals the sum of the NBP reference rate and 8 percentage points.
The minister responsible for the economy announces the rate of statutory late payment interest in commercial transactions in a notice published in the official journal Monitor Polski. Under the notice of the Minister of Finance and Economy of 22 June 2026 (M.P. 2026 item 642), the rate from 1 July 2026 to 31 December 2026 is 13.75% per year (11.75% where the debtor is a public entity that is a healthcare provider)
Position of the Accounting Standards Committee
In its position on settlements with business partners (resolution No. 9/2019 of 9 July 2019, Official Journal of the Minister of Finance, item 83), the Accounting Standards Committee (Komitet Standardów Rachunkowości, KSR) set out in detail the rules for charging interest on purchase and sale transactions. Under point 6.3 of that position, these rules are governed by the Civil Code and the act on payment terms – now the Act on Counteracting Excessive Delays in Commercial Transactions.
The seller may claim different types of interest from the buyer, depending on the specific legal and factual situation. The first type is statutory interest, which is due where the payment term in the purchase and sale agreement is relatively long, that is, longer than the payment term customarily used for that type of transaction or provided for by law.
In a commercial transaction where the contract provides for a payment term of more than 30 days, a seller that is not a large enterprise may claim this interest after 30 days, counted from the day it performed and delivered to the buyer a document confirming the supply of goods or the provision of services, such as an invoice or bill, until the day of payment, but not beyond the payment due date, under Article 5 of the Act on Counteracting Excessive Delays in Commercial Transactions.
The seller may claim statutory late payment interest where a private individual or another entity not listed in the Act on Counteracting Excessive Delays in Commercial Transactions is late with payment. It does not matter whether the seller has suffered a loss because of the delay or whether the delay was caused by circumstances for which the debtor is not responsible
The third type is statutory late payment interest in commercial transactions, which is due where a buyer that is an entity listed in the Act on Counteracting Excessive Delays in Commercial Transactions is late with payment. As in the previous case, it does not matter whether the seller has suffered a loss because of the delay or whether the delay was caused by circumstances for which the buyer is not responsible.
Procedure for charging and documenting interest
If the seller has performed its obligations under the contract and has not received payment within the term set in the contract, it is entitled to statutory late payment interest in commercial transactions from the payment due date until the day payment is received, under Article 7 of the Act on Counteracting Excessive Delays in Commercial Transactions (where the debtor is a public entity – Article 8).
Where no payment term was agreed in the contract, the seller is entitled to statutory late payment interest in commercial transactions, without having to demand payment, after 30 days counted from the day it performed until the day of payment (Article 6(1)).
Documenting the interest charged requires a proper accounting approach. If it decides to charge interest on receivables, the seller must take the following steps:
- Prepare a calculation of the interest for the period of delay
- Issue the buyer an accounting note with details of the calculation
- Make the accounting entries increasing the receivable and finance income
- Update the records of settlements with the business partner
- Include the interest charged in the financial statements
The seller issues the buyer an accounting note, also called an interest note (nota odsetkowa), on the basis of which it records the interest charged in the accounting books as a receivable from the buyer and as finance income. Interest can also be recognised on the basis of a document sent to the buyer as part of the stocktake of receivables by balance confirmation
Measurement of receivables and liabilities at the balance sheet date
Under Article 28(1)(7) and (8) of the Accounting Act, assets and liabilities are measured at least at the balance sheet date in the manner set out in the law. As a rule, receivables are measured at the amount due, applying the prudence principle, while liabilities are as a rule measured at the amount payable. According to the KSR position, this amount also includes interest (contractual, statutory, late payment) accrued at the balance sheet date.
The KSR position on settlements with business partners specifies that measuring receivables from business partners at the balance sheet date with prudence means checking whether the amount due at that date corresponds to the real value of the receivable at that date, that is, its recoverable amount. The other side of these settlements, the valuation of liabilities in the balance sheet, follows its own rules.
| Type of measurement | Receivables | Liabilities | Legal basis |
|---|---|---|---|
| General rule | Amount due | Amount payable | Article 28(1)(7)–(8) of the Accounting Act |
| Prudence principle | Recoverable amount | Full amount of the liability | KSR position |
| Impairment write-down | Where recoverable amount < receivable | Not applicable | Article 35b of the Accounting Act |
Where the recoverable amount of a receivable at the balance sheet date is lower than the amount due, the entity reduces its value accordingly by making an impairment write-down of the receivable under the Accounting Act.
Measuring receivables with prudence requires checking the real recoverable value at the balance sheet date. If this value is lower than the amount due, an impairment write-down of the receivable must be made
Presenting interest in the balance sheet
Interest on settlements with business partners for supplies of goods and services is part of the balance sheet measurement of receivables and liabilities and is presented in the balance sheet together with the related receivable or liability. This is a fundamental rule for presenting financial statements correctly.
For receivables, interest on trade settlements accrued at the balance sheet date is presented in the balance sheet together with the principal receivable, in the same asset item. This approach keeps the financial statements transparent and easy to read.
Entities preparing their balance sheet under Annex No. 1 to the Accounting Act show interest on trade receivables in the following balance sheet items:
- B.II.1(a) - Short-term receivables from related entities
- B.II.2(a) - Short-term receivables from other entities in which the entity holds an equity interest
- B.II.3(a) - Short-term receivables from other entities
Interest on trade receivables is presented in the balance sheet together with the principal receivable in the relevant asset item. It is not shown as a separate item, but as part of the total measurement of the receivable from the business partner
Similarly, for liabilities, interest on trade settlements accrued at the balance sheet date is presented in liabilities together with the principal liability. Entities preparing their balance sheet under Annex No. 1 to the Accounting Act show interest on trade payables in the following items:
- B.III.1(a) - Short-term liabilities to related entities
- B.III.2(a) - Short-term liabilities to other entities in which the entity holds an equity interest
- B.III.3(d) - Short-term liabilities to other entities
Effect on the financial statements and financial analysis
Recognising interest on settlements correctly has a significant effect on various elements of the financial statements. In the profit and loss account, interest charged on receivables increases finance income, while interest charged on liabilities increases the company's finance costs.
From the perspective of financial analysis, the amount of interest charged may indicate liquidity problems at business partners or your own difficulties in paying liabilities. Significant amounts of interest on receivables may point to problems with collecting receivables and a need for tighter control over debt collection.
A trading company sold to a chain of retail shops with 30-day payment terms. One of its customers regularly paid 60–90 days late. The company decided to charge interest under the Act on Counteracting Excessive Delays in Commercial Transactions, which not only increased its finance income but also encouraged the customer to pay on time.
Interest on settlements also affects liquidity ratios. Receivables increased by interest charged raise the value of current assets, which can improve the current and quick ratios. At the same time, however, this improvement may be only apparent if those receivables are difficult to collect. Their real value is checked, among other things, during receivables stocktaking.
Charging interest on receivables increases finance income in the profit and loss account and the value of receivables in the balance sheet. At the same time, it may signal problems with customers paying on time and a need for closer debt collection control
Documentation and bookkeeping of interest
Properly documenting interest charged requires particular care in keeping the accounting records. Every interest charge must be properly documented and supported by a calculation that takes into account the correct legal provisions and the interest rates applicable in the given period.
The basic documents related to charging interest are:
- An accounting note (interest note) issued to the business partner
- A calculation of interest showing the period and the rate applied
- A copy of the invoice or other sales document on which the principal receivable is based
- Documents confirming the payment due date
- Records of payments received from the business partner
In the accounting books, interest charged on receivables is booked by increasing the account of receivables from business partners and the finance income account. Where interest is charged on liabilities, the account of liabilities to business partners and the finance costs account are increased.
Documentation of interest charged must include a detailed calculation showing the correct legal basis, the period and the applicable interest rate. Every interest note must be sent to the business partner and entered in the accounting records
Tax aspects of interest on settlements
Interest on receivables is revenue subject to income tax, but only once it has been received. Interest that has been charged but not received is not included in revenue (Article 12(4)(2) of the CIT Act, Article 14(3)(2) of the PIT Act), so accounting income from an interest note is not yet taxable revenue.
For VAT, interest on receivables is as a rule not subject to this tax, because it is not consideration for a supply of goods or services. Interest is a consequence of failing to meet obligations under the underlying contract on time.
Interest on liabilities may be a tax-deductible cost under income tax rules, provided it is economically justified and related to the business. However, only interest that has been paid is a cost – interest on liabilities that has been charged but not paid, or has been written off, is not a tax-deductible cost (Article 16(1)(11) of the CIT Act, Article 23(1)(32) of the PIT Act).
