Late fee calculator
Estimate a clear late payment fee.
Enter the invoice amount, days overdue, and late fee rate. Use the result for planning, then verify your contract terms and local rules before charging.
Invoice details
Late fee charged
$14.79
Original invoice
$1,000.00
Total now owed
$1,014.79
Calculation breakdown
Pro tip: Add late fee terms to every invoice
Include "A late fee of 1.5% per monthly will be applied to overdue balances" in your invoice payment terms. Clear wording makes follow-up easier and helps clients understand the consequence of paying late.
A late fee is the charge you add when an invoice is paid after its due date. Done right, it nudges clients to pay on time and compensates you for the cash you are missing; done wrong, it is unenforceable or damages the relationship. This calculator estimates a late fee from the outstanding balance, the annual interest rate, and the number of days overdue so you can see the number before you decide to charge it.
How late fees are usually calculated
Late-fee structures can use a flat charge or a percentage of the overdue balance, subject to the agreement and local limits. The interest method — balance × annual rate × days ÷ 365 — prorates the calculation by amount and elapsed days; that does not by itself make the fee lawful or enforceable.
A common range is 1% to 1.5% per month, which is roughly 12% to 18% a year. Whatever you choose, it must be reasonable and, ideally, agreed in advance in your contract or on the original invoice.
Making a late fee enforceable
A late fee is far easier to collect if the client agreed to it before the work started. State the fee and the terms on your quote and invoice: 'A late fee of 1.5% per month applies to overdue balances.' Surprising a client with a fee they never saw is a fast route to a dispute.
Check the legal cap. Many jurisdictions limit the maximum interest or fee you can charge, and exceeding it can make the whole fee unenforceable. Treat the calculator's output as a planning figure, then confirm your local limit.
How to use it
- 1Enter the overdue invoice balance.
- 2Enter the annual interest or late fee rate you use.
- 3Enter the number of days the invoice is past due.
- 4Read the estimated late fee and the new total owed.
- 5Check your contract and local legal cap before charging it.
- 6Add the fee as a clear line on a follow-up invoice.
What to include for the US, Canada, the UK, and Australia
- In the US, permitted late fees and interest caps vary by state; some cap the annual percentage rate you can charge.
- In the UK, the Late Payment of Commercial Debts Act lets businesses charge statutory interest plus a fixed recovery sum on overdue B2B invoices.
- In Canada, interest above the criminal rate is unenforceable, and provinces may add consumer protections.
- In Australia, late fees must be reasonable and are best supported by agreed payment terms.
This is general information, not legal or tax advice. Tax registration numbers, mandatory wording, and retention periods differ by country and by state or province — confirm the rules that apply to you before sending a document to a client.
Worked example
An invoice for $2,000 is 20 days overdue and the agreed late fee rate is 12% a year. The interest is 2,000 × 0.12 × 20 ÷ 365 = $13.15.
The new balance owed is $2,013.15. Because the 12% rate was printed on the original invoice, the client accepts the small fee without argument, and the reminder gets the balance paid the same week.
FAQ
How is the late fee calculated here?
The tool uses simple interest: balance multiplied by the annual rate, multiplied by days overdue, divided by 365. That prorates the annual rate to the exact number of days late.
What is a reasonable late fee rate?
Many businesses use 1% to 1.5% per month, roughly 12% to 18% a year. Keep it within any legal cap that applies where you operate.
Can I charge a late fee if it was not in the contract?
It is much harder to enforce. Late fees work best when they are stated on the quote and invoice before the work begins so the client has agreed to them.
Is there a legal maximum?
Yes, and it varies by country and region. Some places cap the annual rate or the fixed fee. Confirm your local limit before applying a fee.
Should I use a flat fee or interest?
Interest scales fairly with the amount and the delay; a flat fee is simpler but can feel harsh on small balances or trivial on large ones. Many businesses combine a small flat fee with interest after a grace period.
How do I add the fee to an invoice?
Put it as its own labelled line — 'Late fee (1.5%/month, 20 days)' — on a follow-up invoice so the charge is transparent.
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