Late Payment Fee Calculator

Calculate flat, percentage, or recurring late fees on overdue invoices.

How is late payment fee calculator worked out?

A late payment fee is a charge added to an overdue invoice, set either as a flat amount, as a percentage of the balance, or as a percentage applied for each month the invoice remains unpaid.

Late Payment Fee Calculator

Total now owed

$4,567.50

Late fee
$67.50
1.5% per month × 1 month overdue
Annual equivalent rate
18.00%
Check this is enforceable where you trade.
Show the working
Overdue balance$4,500.00
Days overdue45 days
Late fee$67.50
Total now owed$4,567.50

A late fee is only chargeable if your agreed terms provide for it and the rate is permitted where you trade. Some jurisdictions cap late charges or give a statutory rate instead.

A late fee is a deterrent first and revenue second. Its value comes from being stated in advance, applied consistently and small enough to be worth paying rather than disputing — a fee that appears for the first time on an overdue invoice usually costs more in goodwill than it collects.

The formula

Flat fee: fee = fixed amount
One-off percentage: fee = balance × fee % ÷ 100
Recurring monthly: periods = days overdue ÷ 30 (rounded down, minimum 1)
   fee = balance × fee % ÷ 100 × periods
Total owed = balance + fee

The recurring option charges a whole period as soon as the invoice is overdue, then again at each subsequent month — the conventional treatment for a monthly late charge. It is simple interest on the original balance, not compounding; for compounding, use the late payment interest calculator.

State the fee before you need it

A late fee has to be part of the agreement to be chargeable — on the invoice, in your terms, and ideally in whatever the customer signed before the work started. Introducing one on an already-overdue invoice is both hard to enforce and likely to convert a slow payer into a disputing one. Where you do state it, use plain wording that names the rate, when it starts, and whether it repeats.

Charging it is a commercial decision, not an automatic one

Most businesses state a late fee and waive it for good customers who have simply slipped. That is a reasonable use of it: the fee sets the expectation, and waiving it explicitly — saying you are waiving it — earns more goodwill than never having had one. What does not work is stating a fee and never mentioning it again, which teaches every customer that your deadlines are decorative.

Local rules may override your fee

Many jurisdictions regulate what can be charged on a late commercial debt, and several give suppliers a statutory right to interest and a fixed recovery amount whether or not the contract mentions it. Others cap contractual late fees or treat excessive charges as unenforceable penalties. Before relying on a rate, check what applies where you trade — the statutory route is sometimes stronger than the term you drafted.

Frequently asked questions

How do you calculate a late payment fee?

For a flat fee, add the fixed amount once the invoice passes its due date. For a percentage fee, multiply the overdue balance by the percentage. For a recurring monthly fee, multiply the balance by the monthly percentage and then by the number of months the invoice has been overdue.

What is a reasonable late payment fee?

Rates of 1% to 2% per month are commonly used, but what is permissible depends on your jurisdiction and on what your contract says. Some places cap late charges, and some provide a statutory interest rate that applies to commercial debts regardless of the contract.

Can I charge a late fee if it is not on the invoice?

Generally not on a contractual basis — a fee has to have been agreed to be enforceable. Some jurisdictions do give suppliers a statutory right to interest on overdue commercial debts even without a contract term, so it is worth checking whether that applies to you.

Is a late fee the same as interest?

Not quite. A late fee is usually a fixed charge or a flat percentage applied when payment is late, while interest accrues continuously on the outstanding balance for as long as it is unpaid. Some agreements use both.

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