Late payment interest calculator
Enter the amount, the yearly interest rate and the due and payment dates. You'll see how many days late and the interest owed.
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Result
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An estimate for planning only. It is not financial or tax advice.
How late payment interest is calculated
The calculator uses simple interest by days: amount ร yearly rate ร days late รท 365. Days late are counted from the day after the due date until the payment date.
| Amount owed | Yearly rate | Days late | Interest |
|---|---|---|---|
| 10,000 | 10% | 45 | 123.29 |
| 5,000 | 12% | 30 | 49.32 |
| 2,000 | 8% | 90 | 39.45 |
Before you charge late interest
- Write the payment terms on the invoice: due date, interest rate and from when it applies.
- Send a friendly reminder before the due date, and another one right after it.
- When you charge interest, send a new invoice or statement that shows the amount, the days and the rate.
- Keep copies of invoices, reminders and payment dates.
- Check the rules in your country, especially when the client is a private person and not a business.
Late payment rules in some countries
- United Kingdom: between businesses, the law allows interest of 8% above the Bank of England base rate, plus a fixed compensation per invoice, unless the contract says otherwise.
- European Union: between businesses, the late payment directive sets interest of at least 8 percentage points above the European Central Bank rate, plus at least 40 euros compensation.
- United States: there is no single federal rate. Each state sets its own rules and limits, and the contract usually decides.
Rates and rules change. Check the official sources in your country or ask an accountant or lawyer.
Questions and answers
How is the interest calculated?
Simple interest by days: amount ร yearly rate ร days late รท 365.
Which rate should I use?
The rate written in your agreement or invoice terms. If there is none, many countries set a legal rate for late payment; check with an accountant or lawyer.
Do I count the due date itself?
No. If the due date is 1 March and the payment arrives on 2 March, the payment is 1 day late.
Is the interest simple or compound?
Simple. Interest is charged only on the amount owed, not on interest added earlier. This is the usual method for late invoices.
Can I charge a fixed fee as well as interest?
In some places, yes. For example, in the UK and the EU a business can add a fixed compensation for each late invoice. Elsewhere it depends on the contract and the local law.
How do I avoid late payments in the first place?
Clear terms on every invoice, a reminder a few days before the due date, and an easy way to pay. Taking a deposit when the client books also helps.