Am I allowed to charge a late fee on an invoice?

That depends on the law where you and your customer are and on the terms you agreed before the work, so check the rules where you work. This calculator doesn't check whether a rate is allowed. In the UK, GOV.UK says a business can charge another business "statutory interest" of 8% plus the Bank of England base rate on a late payment, unless their contract sets a different rate of interest.

How do I calculate UK statutory interest with this calculator?

Choose Percentage rate and Per year, then enter 8 plus the current Bank of England base rate. GOV.UK's own example uses £1,000 at 8.5% for 50 days. The calculator gives 1,000 × 8.5% × 50 ÷ 365 = 11.64. GOV.UK rounds the daily interest to 23p first, which gives £11.50. The calculator shows a $ sign, but the arithmetic is the same in pounds.

Does a flat late fee change with the number of days?

No. In this calculator a flat fee is charged once, however late the payment is. If the invoice is 0 days overdue, no fee applies.

How do I add a late fee to an invoice?

State the fee or interest rate, when it starts and whether it compounds in your contract and on the invoice before the work is due. When a payment is late, send an updated invoice showing the fee as a separate line. For UK statutory interest, GOV.UK says to send a new invoice if you decide to add interest.

Invoice Late Fee Calculator

Work out the late fee on an overdue invoice from the rate you enter: a percentage per month or per year, or a flat fee.

Invoice details

Unpaid invoice amount ($)

Days overdue

Days since the due date, in whole days.

Late fee type

Rate is charged

Rate (% per month)

A month is counted as 30 days.

Compound monthly (charge the rate on earlier fees too)

Late fee

$22.50

Total due with the fee

$1,022.50

How it was worked out

$1,000.00 × 1.5% × 1.5 months (45 days ÷ 30) = $22.50 (simple interest).

1.5% per month is 18% per year as a simple annual rate.

The fee is rounded to the nearest cent. This calculates the rate you enter; it doesn't check whether that rate is allowed where you work.

The formulas this calculator uses

Percentage per month, simple: fee = invoice amount × monthly rate × (days overdue ÷ 30). A month counts as 30 days, and part-months are charged pro rata.
Percentage per month, compound: fee = invoice amount × (1 + monthly rate)^{whole months} × (1 + monthly rate × remaining part-month) − invoice amount. Each whole month's fee is added to the balance before the next month is charged.
Percentage per year: fee = invoice amount × annual rate × (days overdue ÷ 365), as simple interest.
Flat fee: a single fixed amount, whatever the number of days.

The fee is rounded to the nearest cent, and the total due is the invoice amount plus the rounded fee. Days must be whole numbers from 0 to 3,650 (ten years), and percentage rates from 0 to 100. Amounts are entered to the cent. If the total due would be more than $10 trillion, the calculator says the result is too large to calculate to the cent instead of showing it.

Worked example

A $1,000 invoice is 45 days overdue at 1.5% per month. That is 1.5 months (45 ÷ 30).

Simple: $1,000 × 1.5% × 1.5 = $22.50, so the total due is $1,022.50.
Compound: $1,000 × 1.015 × (1 + 0.015 × 0.5) − $1,000 = $22.6125, which rounds to $22.61.

At 90 days the gap is wider: simple gives $45.00, and compound gives $1,000 × 1.015³ − $1,000 = $45.68. 1.5% per month is 18% per year as a simple annual rate.

Rules on late fees differ

Whether you can charge a late fee, and how much, depends on where you and your customer are and on what you agreed. This is a calculator for the rate you enter, not a check that the rate is allowed. In the UK, the rules for business-to-business debts are on GOV.UK's page on interest for late commercial payments. Elsewhere, check the rules where you work.

For how to word and apply a fee, see how to add late fees to invoices and late payment policies. To see how much of your receivables is overdue, try the invoice aging calculator.

Frequently Asked Questions

Am I allowed to charge a late fee on an invoice?: That depends on the law where you and your customer are and on the terms you agreed before the work, so check the rules where you work. This calculator doesn't check whether a rate is allowed. In the UK, GOV.UK says a business can charge another business "statutory interest" of 8% plus the Bank of England base rate on a late payment, unless their contract sets a different rate of interest.
How do I calculate UK statutory interest with this calculator?: Choose Percentage rate and Per year, then enter 8 plus the current Bank of England base rate. GOV.UK's own example uses £1,000 at 8.5% for 50 days. The calculator gives 1,000 × 8.5% × 50 ÷ 365 = 11.64. GOV.UK rounds the daily interest to 23p first, which gives £11.50. The calculator shows a $ sign, but the arithmetic is the same in pounds.
Does a flat late fee change with the number of days?: No. In this calculator a flat fee is charged once, however late the payment is. If the invoice is 0 days overdue, no fee applies.
How do I add a late fee to an invoice?: State the fee or interest rate, when it starts and whether it compounds in your contract and on the invoice before the work is due. When a payment is late, send an updated invoice showing the fee as a separate line. For UK statutory interest, GOV.UK says to send a new invoice if you decide to add interest.

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