Late payment fee and interest calculator
Find out what you can add to an overdue invoice: interest at your contract rate, a flat late fee, UK statutory interest or the EU minimum. Copy the result straight into your reminder.
The overdue invoice
Pick how the charge is worked out, then enter the invoice details.
$4,871.01
- Original invoice$4,800.00
- Days late30
- Interest rate (yearly)18%
- Interest per day$2.37
- Interest charged$71.01
- Total to request$4,871.01
Only charge what your contract or invoice terms allow, and check local limits. Some US states cap late fees and interest.
How late payment interest is worked out
Late payment interest is normally simple interest charged by the day. The calculator converts any rate to a yearly figure first.
Interest = unpaid amount × yearly rate × days late ÷ 365
Total due = unpaid amount + interest + any fixed fee or compensation
Three worked examples
| Situation | Calculation | Total due |
|---|---|---|
| US agency, terms say 1.5% a month, $4,800 invoice, 30 days late | $4,800 × 18% × 30 ÷ 365 = $71.01 | $4,871.01 |
| UK business-to-business debt of £5,000, 45 days late, base rate of 4% (example) | £5,000 × 12% × 45 ÷ 365 = £73.97, plus £70 compensation | £5,143.97 |
| EU invoice of €3,000, 30 days late, reference rate of 2% (example) | €3,000 × 10% × 30 ÷ 365 = €24.66, plus €40 minimum | €3,064.66 |
Base and reference rates change. Use the rate in force for the period the debt was late.
The rules by country, in brief
| Where | What applies to business-to-business invoices |
|---|---|
| United Kingdom | Statutory interest of 8% plus the Bank of England base rate, and fixed compensation of £40, £70 or £100, unless your contract sets a different rate. |
| European Union | At least 8 percentage points above the ECB reference rate, and at least €40 for recovery costs, under each country’s version of the Late Payment Directive. |
| United States | No single federal rule. Fees and interest come from your contract, within state usury and consumer limits. |
| Canada | Charge what the contract allows. Under the federal Interest Act, a rate stated only per month or week, without the yearly equivalent, can limit what you recover to 5% a year, so state the annual rate. |
| Australia | No general statutory interest for business invoices. Put your late payment terms in the contract and on the invoice. |
| United Arab Emirates | Agree late payment terms in the contract. Courts can award compensation for late payment, so take local advice before charging interest. |
| India | Buyers that pay registered micro and small enterprises late owe compound interest at three times the RBI bank rate under the MSMED Act. |
This is a summary, not legal advice. Consumer contracts follow different rules almost everywhere.
Before you add a fee
- Put the late payment terms on every invoice and in your agreement, so nothing is a surprise.
- Send a friendly reminder a few days before the due date and again on the day.
- If it is still unpaid after a week, send a firm reminder that states the fee or interest that now applies.
- Issue an updated invoice showing the original amount, the charge and the new total.
A clear service agreement and an invoice that states the terms make every step easier.
Late payment questions
How do I calculate interest on a late invoice?
Multiply the unpaid amount by the yearly interest rate, then by the number of days late divided by 365. A 1.5% monthly rate is 18% a year, so a $4,800 invoice paid 30 days late carries about $71 of interest.
Can I charge a late fee if it is not in my contract?
Usually you should only charge what your contract or invoice terms set out. The main exceptions are statutory schemes, such as UK late payment interest for business-to-business debts and the minimums set by the EU Late Payment Directive, which apply even if the contract is silent.
What is UK statutory interest on late payment?
For business-to-business debts, 8% a year plus the Bank of England base rate, worked out as simple daily interest. You can also claim fixed compensation of £40 for debts under £1,000, £70 up to £9,999.99 and £100 for £10,000 or more. You cannot use statutory interest if your contract already sets a different rate.
What does the EU Late Payment Directive allow?
Interest of at least 8 percentage points above the European Central Bank reference rate on late business-to-business payments, plus a minimum €40 for recovery costs. Each EU country applies the directive through its own law.
Is there a legal limit on late fees in the US?
There is no single federal rule for business-to-business invoices. Late fees and interest come from your contract, and state usury and consumer laws can limit them. Many service businesses use 1% to 1.5% a month, but check your state before setting a rate.
Should I charge a flat fee or interest?
A flat fee is simple and easy to explain. Interest grows with how late the payment is, which is fairer on large invoices and keeps the pressure on. Some businesses use both: a small flat fee plus monthly interest.
Will charging a late fee damage the client relationship?
It can, if it comes as a surprise. State the policy on every invoice, send a friendly reminder before the due date, and use the fee as leverage rather than a first resort. Many businesses waive it once for a good client who pays promptly after a reminder.
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Updated September 2026. General information, not financial, tax or legal advice. Check the rules where you work.