How is a late payment fee calculated?

Multiply the overdue invoice amount by your annual interest rate, then by the fraction of the year the payment is late (days late divided by 365). The calculator above does this automatically and also shows the daily rate equivalent and the new total due.

What interest rate should I use for a late fee?

Use whatever rate is stated in your contract, invoice terms or payment agreement with the client. This tool does the arithmetic on the rate you enter — it doesn't tell you what rate is legal or standard in your situation. Check your own contract and any applicable law before charging a client.

Is the late fee this calculator gives me legally enforceable?

This tool only confirms the math, not the law. Whether a late fee is enforceable depends on your contract terms and on rules that vary by jurisdiction, some of which cap interest rates or require specific notice. Check your contract and applicable law, or talk to a lawyer, before applying a fee to a client.

Can I charge a late fee if it wasn't in my original contract or invoice?

Generally a late fee needs to be agreed to upfront — either in a signed contract or stated clearly on the invoice terms before the work was delivered. Adding one retroactively is far harder to justify and may not hold up. Build your late-fee terms into your contracts and invoices from the start.

Should I charge simple or compound interest on a late invoice?

This calculator uses simple interest — the fee is based on the original invoice amount only, not on interest that's already accrued. Compounding (charging interest on the fee itself) is less common for freelancer and small-business invoices and can be harder to justify to a client. Check what your contract specifies before choosing either approach.

Late Payment Fee Calculator

Calculate the late fee owed on an overdue invoice from the amount, days late and your contract's interest rate, with the math shown.

A late payment fee is the extra amount you charge a client when an invoice goes unpaid past its due date. It’s meant to compensate you for the delay and to give clients a reason to pay on time. This page shows the exact formula behind the calculator above so you can see how the fee is built, then walks through a full example using the calculator’s own default numbers.

How the late fee is calculated

The calculator turns three inputs — the invoice amount, how many days late it is, and the annual interest rate you’ve set in your contract or invoice terms — into a dollar fee. The formula is:

Late fee = Invoice amount × (Annual rate ÷ 100) × (Days late ÷ 365)

The logic is straightforward: the annual rate tells you what the fee would be if the invoice were a full year late, so you scale it down to the actual number of days late by multiplying by days late divided by 365. The result is added to the original invoice amount to get the new total due:

Total due = Invoice amount + Late fee

The calculator also shows a daily rate equivalent — the annual rate divided by 365 — so you can see at a glance what each additional day of lateness costs as a percentage of the invoice.

A worked example

Take the calculator’s own defaults: an invoice of $2,000, paid 15 days late, with a late-fee interest rate of 18% per year as stated in the contract.

First, convert the annual rate to a daily rate: 18% ÷ 365 ≈ 0.049% per day.

Next, apply it across the 15 days late: $2,000 × 0.18 × (15 ÷ 365) = $2,000 × 0.18 × 0.0411 ≈ $14.79.

Add that to the original invoice: $2,000 + $14.79 = $2,014.79 — the total now due.

So a $2,000 invoice sitting 15 days late at an 18% annual rate adds just under $15 to the balance. The fee grows with both the rate and the number of days late: double the days late and the fee roughly doubles too, since the formula scales linearly with time.

A common mistake: treating the annual rate as the per-invoice rate

The most common error is charging the full annual percentage as if it applied to any late invoice, regardless of how late it is — for example, billing a flat 18% fee the moment an invoice is even one day overdue. That isn’t what an “18% annual rate” means. An annual rate has to be prorated by the actual time elapsed, which is why the days-late fraction is in the formula. Skipping that step massively overcharges clients on the first few days of lateness and can make a fee look arbitrary or punitive rather than a fair reflection of the delay.

The reverse mistake also happens: forgetting to apply any rate at all and just guessing a flat dollar fee. Working from the formula keeps the fee consistent and easy to explain to a client if they ask how you arrived at the number.

What else affects a late fee

The math above is the easy part. Several things outside the calculator determine whether you can actually charge that fee:

Your contract or invoice terms. A late fee should be agreed upon before the work starts — ideally spelled out in a signed contract or stated clearly on the invoice itself. Charging one with no prior agreement is much harder to defend.
Local law. Some jurisdictions limit how much interest can be charged or require specific disclosures before a late fee applies. This calculator does not know your jurisdiction and does not check legality — it only does the arithmetic on the rate you enter.
Client relationship and recoverability. A fee you’re entitled to charge isn’t always a fee worth charging. Weigh the dollar amount against the value of the ongoing relationship and the likelihood of getting paid at all.
Compounding versus simple interest. This calculator uses simple interest on the original invoice amount. If your contract specifies compounding, your actual fee may differ from this estimate.

This tool is an estimate only, not legal advice. It computes the math from the rate you enter — it does not confirm that rate, or the resulting fee, is valid, enforceable, or compliant with the law in your jurisdiction. Check your own contract terms and applicable law, or talk to a lawyer, before applying a late fee to a client.

Use the calculator at the top of this page with your own invoice amount, days late and contract rate to see exactly what’s owed — and to back up the number with the math behind it if a client asks.