Late Fee / Interest Calculator
Calculate the late fee owed on an overdue invoice, based on an annual interest rate applied daily to the outstanding amount.
The calculation, explained
Daily rate = annual rate ÷ 365. Late fee = invoice amount × daily rate × days overdue. Many jurisdictions cap the legal maximum late fee rate — confirm your local limit before applying one to a real invoice.
Late fee calculation examples
This calculator uses simple daily interest: late fee = amount × (annual rate ÷ 365) × days overdue.
| Invoice | Annual rate | Days late | Late fee |
|---|---|---|---|
| $2,000 | 18% (1.5%/month) | 30 | $29.59 |
| $5,000 | 12% | 45 | $73.97 |
| $750 | 10% | 60 | $12.33 |
Some businesses use a flat late fee instead (e.g. $25 per overdue invoice) or a monthly percentage. Whatever you choose, use the same method you stated in your terms.
Rules and limits on late fees
- Agree it in advance. Late fees are far easier to enforce if they’re in your contract or terms and shown on the invoice before it’s overdue.
- US: states set maximum interest rates (usury limits), and some cap late fees for specific situations such as residential rent. A rate of 1–1.5% per month is common in B2B terms, but check your state’s limits.
- UK: for business-to-business debts, the Late Payment of Commercial Debts (Interest) Act lets suppliers claim statutory interest at 8% above the Bank of England base rate, plus fixed compensation, unless the contract says otherwise.
- EU: the Late Payment Directive sets a statutory interest rate for commercial transactions (reference rate plus at least 8 percentage points) and a minimum €40 recovery fee.
- Consumers often have more protection than businesses — be more cautious charging individuals.
This is general information; check the rules where you and your client are located.
Late-payment wording for your invoices
- “Payment is due within 30 days. Overdue balances are subject to interest of 1.5% per month (18% per year).”
- “A late fee of $25 applies to invoices unpaid 15 days after the due date.”
- “We reserve the right to charge statutory interest and compensation under the Late Payment of Commercial Debts (Interest) Act 1998.” (UK B2B)
Before charging a fee, a friendly reminder often works better — see how to follow up on an overdue invoice.
Common questions
Is charging a late fee legal?
Generally yes, but maximum allowable rates vary by jurisdiction — check your local regulations, and disclose your late fee policy on the original invoice so it isn’t a surprise.
How do I actually add a late fee to an overdue invoice?
Calculate it here, then add it as an additional line item the next time you re-send or follow up on the invoice. See our overdue invoice follow-up guide.
How do I calculate interest on an overdue invoice?
Multiply the invoice amount by the annual interest rate, divide by 365, and multiply by the number of days overdue. $2,000 at 18% for 30 days = $2,000 × 0.18 ÷ 365 × 30 = $29.59.
What is a reasonable late fee?
In B2B terms, 1–1.5% per month on the overdue balance or a modest flat fee is common. Make sure it’s agreed in advance and within your local legal limits.
Can I add a late fee if it wasn't in my terms?
It’s much harder to enforce. Some jurisdictions (such as the UK and EU for B2B debts) allow statutory interest regardless, but generally you should state late fees in your terms before work begins.
Turn this into a real invoice.
Use the full generator to build a proper, line-itemized invoice — free, no signup.