Late payment interest calculator
Work out how much interest and late fees to add to an overdue invoice, based on the amount, the interest rate and how many days late it is.
How the calculator works
- Annual rate: if you enter a monthly rate, it is multiplied by 12.
- Interest per day = amount × annual rate ÷ 100 ÷ 365
- Interest owed = interest per day × days overdue
- New amount due = invoice amount + interest + any flat late fee
This is simple interest, the most common method for invoices. Interest is not charged on interest.
Example
An invoice for 2,500 is 45 days late. The terms say 1.5% per month.
- Annual rate: 1.5 × 12 = 18%
- Interest per day: 2,500 × 0.18 ÷ 365 = 1.23
- Interest for 45 days: 55.48
- New amount due: 2,555.48
Before you charge late fees
- Put it in writing first. State the interest rate or late fee in your quote, contract and on every invoice.
- Check the legal limits. In the US, states cap interest rates. In the UK and EU, business-to-business debts have statutory interest and fixed compensation.
- Send a friendly reminder first. Most late invoices are paid after one polite nudge.
To bill the fee, duplicate the original invoice in your invoice history, or add a new line such as “Late payment interest, 45 days at 18% p.a.”.
Frequently asked questions
How is late payment interest calculated?
Simple daily interest is the invoice amount × annual rate ÷ 365 × days overdue. At 18% a year, 2,000 that is 30 days late accrues about 29.59 in interest.
Can I charge interest on late invoices?
Usually, if your terms say so before the work starts. Many countries also set statutory interest for business-to-business debts, and many US states cap the rate you can charge. Check the rules where you and your client are based.
Is 1.5% per month the same as 18% per year?
For simple interest, yes. 1.5% × 12 months = 18% a year, which this calculator applies daily.
What is statutory late payment interest in the UK?
For business-to-business debts, the Late Payment of Commercial Debts (Interest) Act lets you claim 8% plus the Bank of England base rate, plus fixed compensation of £40, £70 or £100 depending on the debt size.