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Late Payment Fee Calculator

Calculate the exact late fee to add to an overdue invoice — using a flat fee, monthly interest, or annual interest rate. Know what you're owed in seconds.

Invoice Details

$

Late Fee Method

%

Fee Breakdown

Late Fee
—
amount to add
Total Amount Due
—
invoice + late fee
Original Invoice
—
before late fee
Days Overdue
—
calendar days late

Invoice Summary

Understanding Late Payment Fees

Flat Fee Method

A flat percentage fee is the simplest approach — charge a fixed percentage of the invoice total regardless of how long it's been overdue. Common for freelancers and service businesses with straightforward billing.

Fee = Invoice × (Rate ÷ 100)

Monthly Interest Rate

Charge interest based on how many months (or partial months) the invoice is late. The US standard is 1.5% per month — equivalent to 18% annually. Interest grows with each passing month, incentivising faster payment.

Fee = Invoice × Rate × (Days ÷ 30)

Annual Interest Rate

Calculates interest using a per-day rate derived from an annual percentage. More precise for invoices that are only a few days late. Common in formal vendor agreements and government contracts.

Fee = Invoice × Rate × (Days ÷ 365)

Legal Considerations

Late fees must be disclosed in your contract or on your invoices before work begins — not added as a surprise after the fact. Some US states cap the maximum allowable interest rate on overdue invoices. Always confirm your rate is compliant with local law.

US Standard: 1.5%/month (18%/year)

Business Examples

Freelancer

$2,500 Invoice — 21 Days Late

Flat fee method · 5% of invoice amount · applied once on overdue balance
+ $125 late fee
Agency

$8,000 Invoice — 45 Days Late

Monthly interest · 1.5%/month · 1.5 billing periods elapsed
+ $180 late fee
Contractor

$15,000 Invoice — 30 Days Late

Annual interest · 18%/year · 30 days elapsed (÷ 365)
+ $221.92 late fee
Consultant

$5,000 Invoice — 60 Days Late

Monthly interest · 1.5%/month · 2 billing periods elapsed
+ $150 late fee

Best practices for late payment policies

  • Put it in writing before you start. Your late fee policy must appear in your contract and on every invoice. A fee you add after the fact is unenforceable and damages the client relationship.
  • Use 1.5% per month as your default. This is the widely accepted US standard — high enough to motivate payment, low enough to remain legally defensible in most states.
  • Send a reminder before the due date. A brief "payment due in 3 days" message prevents most late payments before they happen. Reactive collection is harder than proactive reminders.
  • Apply fees consistently. If you waive late fees for some clients but not others, you undermine their purpose and create expectations of flexibility. Apply the policy consistently unless there's a genuine exceptional circumstance.
  • Know your state's limits. A handful of states impose caps on late fee interest rates. If you work with clients across multiple states, use a conservative rate like 1.5%/month that falls within limits everywhere.

Frequently Asked Questions

Yes, provided you disclosed the late fee policy before entering the agreement — either in your contract or on your invoice. You cannot retroactively add a late fee clause to an existing invoice. Once disclosed upfront, late fees are generally enforceable in the US, though some states cap the allowable interest rate.
The most widely used rate is 1.5% per month (18% annually). This is high enough to motivate timely payment without being so aggressive that it alienates clients. For flat fee situations, a one-time 2–5% charge on the invoice total is common among freelancers and small service businesses.
Flat fees are simpler and easier to communicate to clients — great for freelancers and small service providers. Interest-based fees (monthly or annual) scale with time and are more appropriate for ongoing vendor relationships or larger invoice amounts where delayed payment has a real cash flow cost. Interest-based fees also apply ongoing pressure the longer a client delays.
If the fee was disclosed in your contract and the client refuses, you have a few options: negotiate a partial waiver in exchange for immediate full payment of the original invoice, send a formal demand letter, engage a collections agency, or pursue the matter in small claims court for amounts under the threshold in your state (typically $5,000–$10,000). For ongoing clients, waiving the first late fee as a goodwill gesture while making clear future fees will be enforced is often a practical approach.
This calculator applies the interest to the original invoice amount (simple interest), not to a compounding balance. Compound interest — charging interest on accrued interest — is more complex, less common for standard invoicing, and may face additional legal scrutiny. For most small business invoicing purposes, simple interest on the original invoice total is appropriate.