Result
Deferral cost
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This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
Deferral cost = amount × cost of capital ÷ 100 × extra days ÷ 365. By giving a buyer a longer payment term, a company is effectively lending to them for free — this formula shows what that implicit lending costs, in terms of money the company could have earned or saved by getting paid sooner.
This is the mirror formula to the savings from accelerating receivables: that one is about how much a company gains by getting paid earlier, this one is about how much it loses by agreeing to be paid later than it could have been.
In practice, this cost is worth comparing against the commercial benefit of granting the deferral — for example, higher sales or retaining a major client: the deferral can be justified if its commercial payoff exceeds this computed cost of money.