Late Payment Fee Calculator
Calculate late payment fees and interest charges on overdue invoices. Know exactly what you're owed when clients pay late.
Typical range: 1-2% per month (12-24% annually)
Number of days after due date before late fees apply
Legal Considerations: Late payment fees must be reasonable and stated in your contract or invoice terms. Check your local laws for maximum allowable rates.
Common Rates: Most businesses charge 1-2% per month (12-24% annually) on overdue invoices. Some use a flat fee structure instead.
Grace Periods: Many businesses offer a 7-15 day grace period before applying late fees to maintain good client relationships.
Best Practice: Always include late payment terms in your invoice and contract before starting work.
How to Use This Late Payment Fee Calculator
Our free late payment calculator helps freelancers, contractors, and businesses determine fair late payment fees when clients don't pay on time. Simply enter your invoice details, and we'll calculate the compound interest and total amount owed.
Understanding Late Payment Interest
Late payment interest compensates you for the time value of money and the administrative burden of chasing payments. Most jurisdictions allow reasonable interest charges on overdue invoices, typically between 12-24% annually (1-2% monthly).
How Late Fees Are Calculated
This calculator uses compound interest, meaning interest is calculated on the original amount plus any previously accrued interest. This is the standard method used by most businesses and is legally enforceable when clearly stated in your payment terms.
Tips for Collecting Late Payments
- • Send a friendly reminder 3 days before the due date
- • Follow up with a polite email on the due date
- • Send a formal late payment notice 7 days after due date
- • Make a phone call after 14 days overdue
- • Consider using a collection agency after 60 days
Preventing Late Payments
The best way to handle late payments is to prevent them. Use professional invoicing software like PrestoBills to send automatic payment reminders, accept online payments, and track invoice status in real-time.