Late Payment Interest Calculator
Compute interest accrued on an unpaid invoice balance.
How is late payment interest calculator worked out?
Late payment interest is the overdue balance multiplied by the annual interest rate, multiplied by the number of days overdue divided by 365. Simple interest accrues on the original balance; compound interest accrues on the balance plus interest already added.
Late Payment Interest Calculator
Total now due
$8,105.21
- Interest accrued
- $105.21
- Interest per day
- $1.75
- What each further day of delay costs the customer.
Show the working
| Outstanding balance | $8,000.00 |
| Annual rate | 8.00% |
| Days overdue | 60 days |
| Interest, simple | $105.21 |
| Total now due | $8,105.21 |
Interest on late commercial payment is regulated in many jurisdictions, sometimes with a statutory rate and a fixed recovery amount that apply regardless of what the contract says. Check the position where you trade before relying on a contractual rate.
Interest differs from a flat late fee in that it keeps accruing, which makes it a more proportionate charge on a large invoice and a negligible one on a small invoice paid a few days late. It is also the form that statutory late payment regimes usually take.
The formula
Daily rate = annual rate ÷ 365
Simple interest:
Interest = balance × daily rate × days overdue
Compounded monthly:
Total = balance × (1 + annual rate ÷ 12) ^ (days overdue ÷ 30)
Interest = total − balanceSimple interest is the usual basis for commercial late payment and is what most statutory schemes use. Compounding requires a clear contractual right in many jurisdictions, so do not assume you can apply it by default.
Quoting the daily figure changes the conversation
"The invoice is 60 days overdue" is easy to file away. "Interest is accruing at 1.75 a day, and stands at 105" is a number that has to be dealt with, and it moves the discussion from whether payment is late to what settling it costs. The daily figure is also the most useful thing to put in a follow-up email, because it makes the cost of another week concrete.
Statutory interest may be better than your contract
Several jurisdictions give suppliers a statutory right to interest on overdue commercial debts, often at a margin above a central bank reference rate, together with a fixed sum toward recovery costs — and in some of them that right cannot be contracted away by a term that offers a substantially worse remedy. Where such a scheme exists, it is frequently a stronger basis for a claim than a rate you wrote into your own terms, and it applies without needing the customer to have agreed to it.
Charging interest without ending the relationship
Interest is most effective as a stated position you can choose to waive. Raise it early and neutrally — a line on the statement rather than a threat — and reserve actually invoicing it for customers who are persistently late rather than occasionally slow. Applied selectively and predictably, it changes payment behaviour; applied inconsistently, it is just a source of disputes.
Frequently asked questions
How do you calculate interest on an overdue invoice?
Divide the annual interest rate by 365 to get a daily rate, then multiply the outstanding balance by that daily rate and by the number of days the invoice is overdue. A balance of 10,000 at 8% a year accrues about 2.19 a day.
What interest rate can I charge on a late invoice?
Whatever your contract provides, subject to local limits — and in many jurisdictions there is a statutory rate for overdue commercial debts that applies even without a contract term. Rates that are excessive relative to the loss may be unenforceable as penalties, so check the rules where you trade.
Should late payment interest be simple or compound?
Simple interest is the usual basis for commercial debt and is what most statutory schemes apply. Compounding generally requires a clear contractual right, and in some jurisdictions is restricted, so do not apply it by default.
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