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Late Fee Calculator for Overdue Invoices

Work out what a late-paying client owes in interest and fees — by monthly or annual rate, flat fee, or UK and EU statutory interest. Then copy a matching late-payment clause and a polite reminder email.

Calculate late fees on an invoice

$

Still unpaid? Leave today's date.

Late fee type
% / mo

1–1.5% per month is a common contract rate. Check local usury limits.

days

Days after the due date before fees start.

Runs entirely in your browser. Nothing you enter is sent anywhere.

Calculating…

How it works

How are late fees on an invoice calculated?

Interest = unpaid amount × annual rate × days late ÷ 365. A monthly rate is converted to an annual one by multiplying by 12, and any flat fee or statutory compensation is added on top.

Worked example: a $2,500 invoice at 1.5% per month (18% per year), paid 45 days late, accrues $2,500 × 0.18 × 45 ÷ 365 = $55.48. With a 10-day grace period, only 35 days count and the interest is $43.15.

The calculator uses simple interest accrued daily. That is the most common reading of a late-fee clause and the method used for UK statutory interest.

What are statutory late payment rules in the UK and EU?

Businesses in the UK and EU can claim interest and fixed compensation on late business-to-business payments by law, even if the contract is silent.

  • UK: 8% a year above the Bank of England base rate, plus £40 for debts under £1,000, £70 for £1,000–£9,999.99, and £100 for £10,000 or more.
  • EU: Directive 2011/7/EU sets interest of at least the European Central Bank reference rate plus 8 percentage points, and a fixed €40 for recovery costs. Each country implements it in its own law, and some set higher minimums.

Enter the current central-bank rate in the calculator; it adds the 8-point margin and the fixed sum for you.

How do I make a late fee enforceable?

Put it in writing before the work starts, state a specific rate and when it begins, keep it proportionate, and cap it at the legal maximum.

Add the clause to your contract or the terms your client accepts, and repeat it on every invoice with the due date. Avoid fees that look like a punishment — a large percentage charged all at once is more likely to be challenged than modest monthly interest. Our freelance contract review flags missing or weak payment terms before you sign.

What should I do when a client pays late?

Send a friendly reminder first, then a firmer one that states the late fee, then pause work if your contract allows it.

Most late payments are oversights, so the first reminder — the template above — should be polite and specific about the amount and the due date. If the invoice stays unpaid, invoice the accrued late fees separately and stop new work until the account is current. For a cancelled project rather than a late one, use the kill fee calculator.

Clause examples

Weak payment terms vs. ones you can enforce

Illustrative examples to help you tighten your own terms. They are not ready-made contract language.

No rate stated

Risky

“Late payments may be subject to additional charges.”

Safer

“Overdue amounts accrue interest at 1.5% per month, calculated daily from the day after the due date, or the maximum rate permitted by law, whichever is lower.”

“May be subject to charges” gives you nothing to invoice. A stated rate, start date, and legal-cap fallback make the fee claimable.

Pay-when-paid

Risky

“Contractor will be paid within 30 days after Client receives payment from its customer.”

Safer

“Client will pay each invoice within thirty (30) days of receipt, regardless of whether Client has been paid by any third party.”

Pay-when-paid ties your invoice to someone else's customer. A fixed net term starts the clock — and the late fee — on your invoice.

Late fee as a penalty

Risky

“Any invoice paid late will incur a penalty equal to 25% of the invoice amount.”

Safer

“A late fee of $50 applies to any invoice unpaid 10 days after its due date, plus interest at 1% per month on the unpaid balance.”

Courts can refuse to enforce a charge that looks like a punishment rather than a fair estimate of your cost. Modest, proportionate fees hold up better.

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FAQ

Late fee and late payment questions

  • How do I calculate a late fee on an invoice?
    Multiply the unpaid amount by the annual interest rate, then by the number of days late divided by 365. A $2,500 invoice at 1.5% per month (18% a year) paid 45 days late accrues $2,500 × 18% × 45 ÷ 365 = $55.48. Add any flat late fee your contract allows.
  • What is a reasonable late fee for freelancers?
    Interest of 1% to 1.5% per month on the unpaid balance is common, sometimes with a small flat fee. Whatever you choose must be in the contract or accepted terms before the work starts, and it must stay within local legal limits.
  • Can I charge a late fee if it isn't in my contract?
    In the US, generally not — late fees need to be agreed in advance. UK and EU businesses have a statutory right to interest and fixed compensation on late business-to-business payments even when the contract says nothing, unless a different fair rate was agreed.
  • How does UK statutory late payment interest work?
    Under the Late Payment of Commercial Debts (Interest) Act 1998, a business can claim interest at 8% a year above the Bank of England base rate, plus fixed compensation of £40, £70, or £100 per invoice depending on its size. It applies to business-to-business debts, not consumers.
  • What is the maximum late fee I can charge?
    It depends on where you and your client are. Many US states cap interest through usury laws or rules on penalties, and some countries set statutory rates. Phrase your clause as your rate “or the maximum permitted by law, whichever is lower” so it adjusts automatically.
  • Is the interest simple or compound?
    This calculator uses simple interest accrued daily, the most common reading of a late-fee clause. If your contract says interest compounds monthly, the amount will be slightly higher.

FreeContractReviewer.com provides AI-generated information to help you understand possible contract issues. It is not legal advice and does not replace a qualified lawyer.