Late Payment Interest & Late Fee Calculator
Find out how much an overdue invoice is now worth. Enter the amount, the annual interest rate in your contract (or the legal rate where you are), how many days late it is and any flat fee.
How late payment interest works
Most late payment interest is simple interest calculated per day. The formula is: amount × annual rate × days late ÷ 365. A $2,500 invoice at 12% a year that is 45 days late builds up about $36.99 in interest, or roughly $0.82 per day. Add a flat late fee of $40 and the client now owes $2,576.99.
Where does the rate come from? First, your own contract or invoice terms. If you wrote "1.5% per month on overdue balances" that is 18% a year. If your agreement says nothing, some countries set a statutory rate. In the UK, the Late Payment of Commercial Debts (Interest) Act 1998 lets businesses claim 8% above the Bank of England base rate plus a fixed compensation sum. In the EU, the Late Payment Directive sets a reference rate plus at least 8 percentage points. In the US, rules vary by state and many states cap the rate you can charge, so check before you add a fee.
Simple vs compound interest
Simple interest only charges on the original amount. Compound interest also charges interest on previous interest. Only use compounding when your signed terms clearly allow it; charging more than you agreed is a quick way to lose the argument and the client.
How to actually get paid
- Send a friendly reminder the day after the due date with the invoice attached.
- Follow up at 7 and 14 days and state the interest and fee that are now applying, using this calculator.
- Call or message the person who approved the work, not just accounts payable.
- Send a formal final notice with a deadline and the total owed.
- Consider small claims or a collection agency as a last step.
Prevention beats chasing
Many late payments are really disputes in disguise. The client "isn't sure" the extra work was agreed, so they sit on the whole invoice. The best defence is paperwork created at the moment the job changes: a short signed note stating what was added, what it costs and that the client approved it. When the client has signed the change, there is nothing left to argue about and the invoice usually gets paid faster.
Put your late-payment terms on every quote and invoice: the due date, the interest rate, any flat fee and how payment should be made. Clear terms that the client has seen in advance are much easier to enforce than terms you mention after the fact.
This calculator is an estimate for planning and reminders. It is not legal or tax advice.
Client stalling because they "never approved" the extra work?
SignedChange turns a verbal change into a PDF both sides sign on their phones in about a minute. Your first 3 documents are free.
Get a change signed freeMore free tools
Need numbers for a pitch or report? See our scope creep & late payment statistics.
Frequently asked questions
How do I calculate interest on a late invoice?
Multiply the invoice amount by the annual rate, then by the number of days late, and divide by 365. That gives simple daily interest.
What is a reasonable late fee?
Many businesses use 1% to 1.5% per month or a small flat fee. The fee must be in your agreed terms and must not exceed the legal limit where you work.
Can I charge interest if my contract does not mention it?
In some countries, such as the UK under the Late Payment Act, businesses can claim statutory interest. In other places you may need it in the contract. Check your local rules.
Should I use simple or compound interest?
Use simple interest unless your signed terms clearly say interest compounds.
Is my data saved?
No. The calculation runs only in your browser.