Late payment interest calculator
Calculate the interest and fees owed on an overdue invoice using simple interest.
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How it’s calculated
Late payment interest is normally simple interest: the annual rate is converted to a daily rate and multiplied by the number of days the payment is late. Any fixed fee is added on top.
Daily interest = Amount × annual rate ÷ 100 ÷ 365Interest = Daily interest × days lateTotal due = Amount + Interest + Fixed fee
Frequently asked questions
How is late payment interest calculated?
Multiply the overdue amount by the annual rate, divide by 365 and multiply by the number of days late. For 1,000 at 10% for 30 days: 1,000 × 0.10 ÷ 365 × 30 = 8.22.
What interest rate can I charge on late invoices?
Use the rate in your contract or invoice terms, within the limits of local law. In the EU, the Late Payment Directive sets statutory B2B interest of at least the ECB reference rate plus 8 percentage points, plus €40 fixed compensation. In the UK, statutory interest is 8% above the Bank of England base rate, plus fixed compensation of £40–£100. In the US, limits are set by state law.
Should late fee terms be on my invoice?
Yes. State your payment terms, the late interest rate and any fixed fee on the invoice and in your contract — it makes the charge easier to enforce and encourages on-time payment.
Does this calculator use compound interest?
No. It uses simple interest, which is how statutory late payment interest is usually calculated.
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Results are estimates for general information only and are not tax, legal or financial advice.