Calculate your late payment fees

Practical guide: overdue invoice interest and how this tool works

Late payment interest is meant to reflect the cost of waiting for money you were entitled to on the due date. This calculator helps you turn dates, principal, and a chosen rate into a clear number you can put in front of a client or your own records. It is built for transparency: you see days overdue, daily accrual, and a written breakdown string that matches the math.

What the math assumes. Amounts here use simple interest on the original invoice total for the overdue window (from the day after the due date through the payment date you enter). Many statutory schemes and commercial invoices are quoted on that basis for straightforward debts. If your contract says interest compounds, accrues only on business days, or uses a different day-count convention, your real-world figure can differ—use this page as a structured estimate, then confirm against your paperwork or a qualified adviser.

Choosing a fee type in the calculator

Each option maps to a different way clients encounter late charges in the wild:

• Statutory rate — Annual percentage applied pro rata over the exact number of calendar days overdue (÷ 365). Use the country chips for presets; you can still override the percentage if your reference rate changed.
• Flat % of invoice — One-time charge as a slice of the face amount, regardless of how long payment was late. Useful when your terms say “X% after Y days” as a single administrative fee.
• Daily % — The rate field is interpreted as a percent of principal per day overdue. Common when agreements spell out a daily figure instead of an annual APR.
• Monthly % — The rate field is a percent per month; the tool approximates duration in months as days ÷ 30 for a practical running total. Compare that shortcut to your contract if it defines a “month” differently.

United Kingdom: statutory interest in context

The Late Payment of Commercial Debts (Interest) Act 1998 is aimed primarily at business-to-business debts on commercial contracts, not every consumer scenario. The headline formula most people quote is 8% per year plus the Bank of England base rate, with the combined figure expressed as a simple annual rate and applied across the late period. The preset in this tool reflects a commonly cited total when the base rate is 5.25%; official tables and announcements change over time, so if your dispute spans a rate change, you may need to split periods or verify the rate that applied on each segment.

Creditors in scope may also have rights to reasonable recovery costs (including tiered fixed sums by debt size in many cases). Those add-ons are not modeled in the interest-only fields above—track them separately in your ledger and correspondence.

United States: contract first, then caps

Unlike the UK statutory B2B framework, U.S. practice usually starts with what you and the customer signed: explicit late-fee or interest language on the quote, master services agreement, or invoice terms. Courts and regulators care whether the charge was disclosed, agreed, and not out of line with state usury or consumer-protection rules. The default U.S. preset here (18% per year, expressed as 1.5% per month in the interface note) is a widely used commercial shorthand—treat it as a starting point, not a 50-state guarantee.

Australia: verify state limits and your agreement

Australian businesses often rely on contract clauses and, where applicable, penalty interest regimes that vary by state and by whether the debtor is a consumer or a business. The Australia preset uses a 10% per annum simple rate as a practical ceiling-style reference used in many commercial discussions; your agreement, industry, or state law may prescribe something else. Always align the percentage with current local rules before issuing a final demand.

Operational checklist before you rely on a number

1. Match the currency to the invoice and the bank account you expect to receive.
2. Confirm whether the due date excludes weekends/public holidays in your terms; this tool counts calendar days between the two dates you enter.
3. Keep a PDF or email trail of the original invoice, reminders, and any promise-to-pay messages.
4. If you use the demand letter block, replace every bracketed placeholder and attach your calculation screenshot or the breakdown text for consistency.

Freelancers and small teams: setting terms clients actually read

Put payment due date, currency, and late consequences on the first page of the proposal or SOW, not buried in appendix Z. Pair numbers with plain language (“Interest accrues from the day after the due date at …”). Consider a short grace window for trusted clients, but document the exception so it does not reset your standard terms for everyone. When a relationship ends badly, auditors and mediators look for consistency between what you invoiced, what you calculated, and what you said in email—this calculator is a worksheet for that alignment, not a substitute for legal review.