Late Payment Interest Calculator — Free Online Tool
When a client pays late, you're effectively lending them money for free — unless your contract charges interest. This late payment interest calculator computes the interest owed on an overdue invoice from the amount, rate, and days late.
What is the Late Payment Interest Calculator?
Most late-payment clauses use simple interest on a 365-day year: invoice amount × annual rate × days late ÷ 365. At 1.5% per month (18% APR) on a $10,000 invoice 60 days late, that's about $296 — real money worth invoicing for.
To actually collect it, the rate should be in your contract or terms before the work starts; charging surprise interest afterward rarely holds up and always strains the relationship. Many freelancers use 1–1.5% monthly as standard. Bill the interest as a separate line item on a revised invoice, and keep records — in some jurisdictions you can also recover collection costs.
How to use this calculator
- Enter the invoice amount.
- Enter the annual interest rate from your contract.
- Enter days late past the due date.
- Click Calculate Interest.
Formula
Frequently asked questions
What late fee is standard for invoices?
1–1.5% per month (12–18% APR) is common in freelance and B2B contracts. Whatever you choose, put it in writing before work begins.
Can I charge interest if it wasn't in the contract?
It's much harder — you generally need the rate agreed upfront. Some jurisdictions imply statutory interest, but don't rely on it.
Is late payment interest simple or compound?
Almost always simple interest on overdue invoices, calculated on a 365-day year — which is what this late payment interest calculator uses.
Should I invoice for small interest amounts?
For a few dollars, often not worth the friction. For large or very late invoices, absolutely — it also motivates faster payment next time.