When an invoice goes unpaid past its due date, you may be entitled to charge interest or a late fee — provided you set it out in your payment terms beforehand. This free late payment fee calculator works out the interest owed based on the invoice amount, the interest rate, and how many days the payment is overdue, so you know exactly what to add to your follow-up invoice.
How late payment interest is calculated
The most common method is simple daily interest: the invoice amount multiplied by the annual interest rate, multiplied by the number of days overdue divided by 365. For example, a $1,000 invoice at 8% per year that's 30 days late accrues about $6.58 in interest. Many businesses also add a fixed flat fee on top.
Can you legally charge a late fee?
In most places, yes — but only if you stated the late-fee or interest policy in your terms before the work began. Some countries set statutory rates: the UK, for instance, allows statutory interest of 8% above the Bank of England base rate plus a fixed recovery fee for late commercial payments. Always check your local rules and put your policy on the original invoice.
- State your late-fee policy on the invoice up front
- Use a reasonable rate (commonly 1–2% per month or a statutory rate)
- Add a flat recovery fee if your jurisdiction allows it
- Send a clear reminder before applying charges
Frequently Asked Questions
How do I calculate a late payment fee?
Multiply the invoice amount by the annual interest rate, then multiply by the number of days overdue divided by 365. Add any flat late fee on top. This calculator does it instantly.
What is a typical late fee for an invoice?
Common late fees are 1–2% of the invoice per month, or a statutory interest rate set by your country. You can also charge a fixed flat fee if you stated it in your terms.
Can I charge interest on an overdue invoice?
Yes, as long as you set out the interest or late-fee policy in your payment terms before doing the work. Many countries also have statutory late-payment interest rules for business invoices.