2 min read
Definition
A grace period is an interval during which a payment can be made without incurring a penalty, or during which interest does not accrue. On trade credit it might be the days between invoice and interest starting; on a loan it can be a few days after the due date before a late fee applies. Terms vary widely — do not assume one exists.
In plain terms
It is a little breathing room around the deadline. Useful, but only if the contract actually grants it.
Why it matters for your company
Read the terms to see whether a grace period applies and how long it runs — relying on one that is not there triggers charges. See default interest.
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Read →Funding for UK limited companies
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