Late Payment Interest Calculator
Work out exactly what an overdue invoice is worth today — days late, the interest owed, and what it grows by each day. Use your own late fee, or the UK statutory rate for commercial debts. Runs entirely in your browser; nothing is sent anywhere.
Deliberately left blank — the base rate changes, and a stale number here would give you a wrong figure. Check the current rate on the Bank of England page and enter it. Statutory interest is that rate plus 8%.
This is a calculator, not legal or tax advice. Rules differ by country, state and contract — check your own terms, and take advice before enforcing a debt.
How late payment interest actually works
Interest on an overdue invoice is simple arithmetic: an annual rate, divided down to a daily rate, multiplied by the outstanding amount and the number of days past the due date. A “1.5% per month” fee is 18% a year, which is roughly 0.0493% a day — on a £1,000 invoice that is about 49p a day. The number is small daily and meaningful monthly, which is exactly why stating it changes behaviour more often than it earns money.
Two things decide whether you can charge it at all. First, was it agreed? A late fee is a contract term, so it needs to be on the invoice or in the engagement terms before the work, not invented after the client goes quiet. Second, is there a statutory right that applies anyway? In the UK there is, for business-to-business debts, and it exists whether or not your paperwork mentions it.
UK: statutory interest and fixed compensation
Under the Late Payment of Commercial Debts (Interest) Act 1998, a business chasing another business (or a public body) can claim statutory interest of 8% above the Bank of England base rate when no adequate contractual remedy was agreed. On top of the interest you can claim a fixed sum per invoice, which is set by the size of the debt:
- Debt under £1,000 — £40
- Debt of £1,000 to £9,999.99 — £70
- Debt of £10,000 or more — £100
The clock normally starts 30 days after the later of delivery and the invoice, unless you agreed a different date. Consumers are outside this regime, and the statutory route does not apply where the contract already provides a substantial remedy of its own.
US and elsewhere: it is whatever you agreed
There is no federal late-payment rate in the US. A late fee is contractual, and the common range for freelancers and small businesses is 1% to 1.5% per month. Several states cap the interest a business may charge, so a headline 5% monthly fee is more likely to be unenforceable than lucrative. The practical approach is a modest rate you will actually apply, stated plainly on the invoice, with a short grace period so a client who pays three days late is not punished for a bank delay.
The EU has a directive comparable to the UK regime, and many other jurisdictions have something similar for commercial debts. If the invoice crosses a border, the governing-law clause in your contract decides which set of rules you are actually relying on.
Putting it on the invoice so it holds up
- State the rate and the basis: “Overdue accounts are charged 1.5% per month (18% a year).”
- Say when it starts — on the due date, or after a stated grace period
- Keep the due date unambiguous: a real date, not just “Net 30”
- Use the same wording on every invoice, so no client can say it was new to them
- When you do apply it, show the calculation — amount, days, rate — not just a lump sum
- Send the first reminder the day after the due date; most late payments are administrative, not deliberate
The invoice generator puts your terms and a real due date on every invoice, and the sending guide covers the follow-up sequence.
FAQ
- How much interest can I charge on a late invoice?
- It depends where you are and what your contract says. In the UK, if nothing was agreed, the Late Payment of Commercial Debts (Interest) Act 1998 entitles a business to statutory interest of 8% above the Bank of England base rate, plus fixed compensation. In the US there is no federal rate — a late fee is contractual, commonly 1% to 1.5% per month, and some states cap it. Whatever you charge, it has to be stated on the invoice or in the contract before the work.
- Is 1.5% per month a reasonable late fee?
- 1% to 1.5% per month (12–18% a year) is the most common range for small businesses and freelancers in the US, and it is generally seen as reasonable rather than punitive. Check your state’s interest cap before going higher — an unenforceable fee is worse than a modest one that gets paid.
- Can I charge a late fee if it was not on the invoice?
- Usually not, unless a statutory right applies. A late fee is a contract term: if the client never agreed to it, you will struggle to enforce it. The UK statutory route is the main exception, because the right exists in law even when the contract is silent. Put your terms on every invoice so the question never comes up.
- How is the daily interest worked out?
- Take the annual rate, divide by 365 to get a daily rate, then multiply by the outstanding amount and the number of days past the due date. This calculator shows the daily figure so you can keep adding to it while the invoice stays unpaid.
- Should I charge a late fee at all?
- The point of a late fee is usually deterrence, not income. Many businesses state the fee on every invoice, then waive it for a good client who pays a few days late, and apply it when an account keeps drifting. Being able to show a calculated figure makes the conversation concrete.