Late fee calculator

Questions people ask about late fees

Can I charge a late fee on an overdue invoice?

Generally only if your customer agreed to one. A late fee is a contract term: it comes from your payment terms, your quote, your purchase order or your signed agreement, and it is far easier to enforce when the wording was in front of the customer before the work started rather than added to an invoice afterwards. Even where a term exists, state usury law caps what is actually collectable, and some terms are unenforceable however they are worded. If the amount matters, the wording of your own contract is the thing to look at first, and a lawyer in your state second.

What late fee should I charge?

We will not give you a figure, and you should be suspicious of any calculator that does. There is no national standard for business-to-business late payment in the United States and no statutory rate that applies by default — whatever rate you are entitled to is whatever you and your customer agreed, subject to your state's cap. This calculator takes the rate from your contract because that is the only place it can honestly come from.

What is the difference between a flat late fee and interest?

A flat fee is charged once, the moment the invoice goes past due (or past the grace period), and it does not grow. Interest accrues for as long as the money is outstanding, so it keeps climbing until the invoice is paid. Some contracts have both: a flat administration charge plus interest running from the due date. If yours does, run this twice and add the two together.

Should I use simple or compound interest?

Whatever your contract says — and if it does not say, simple is the safer reading. Simple interest is charged on the invoice balance only. Compound interest adds the interest to the balance at intervals, so the interest starts earning interest of its own, which over a long overdue period is a much larger number. A term that says '1.5% per month' with nothing else is normally read as simple. If you charge compound interest without a term that clearly provides for it, you are inviting exactly the argument you were trying to avoid.

Does the grace period delay the interest, or just the start of it?

In this calculator, a grace period pushes back the day charging begins: with seven days' grace on an invoice due on the 1st, nothing accrues until the 9th, and an invoice settled on the 8th carries no fee at all. Some contracts are written the other way, so that once you pass the grace period interest is backdated to the due date. If yours reads that way, set the grace period to zero here and you will get that answer instead.

Do you count 365 days or 360?

365, always, with the actual number of calendar days elapsed — the convention usually written ACT/365F. So a leap day is counted as a day and a period covering one accrues 366/365 of the annual rate, rather than being ignored or being absorbed into a 366-day divisor. The 360-day year some lenders use would make every figure here about 1.4% larger. It is stated on the page rather than buried because over a long overdue period the conventions genuinely diverge, and a number you cannot reproduce is a number your customer will argue with.

How does a part payment affect the interest?

It reduces the balance from the day it arrives, so everything after that accrues on the smaller figure. This calculator applies each payment to the interest accrued so far first and to the invoice balance second, which is the usual reading of a payment on account. That has a consequence worth knowing: if a customer pays exactly the face value of the invoice, the invoice is not fully settled, because part of that money went to the interest and a small balance is still running.

Is this legal advice?

No. It is arithmetic. It tells you what a rate you typed produces over a number of days you typed — it does not tell you whether you are entitled to charge it, whether the amount is enforceable where your customer is, or whether charging it is a good idea with this particular customer. Usury caps, consumer-protection rules and the precise wording of your own contract all bear on that, and none of them are in this page.

Do I need an account to use this?

No. There is no signup, no email wall and no trial. The calculator makes no server call at all, so the invoice amounts and dates stay in your browser. The email box further down the page is the one exception, and only if you choose to fill it in.