Late Payment Fee Calculator
When an invoice goes unpaid, you may be entitled to charge interest and a late fee, but working out a fair, defensible figure is fiddly. This calculator takes the invoice amount and due date and computes the late fee four ways: UK statutory interest for commercial debts, a custom annual rate, a monthly rate, or a simple flat fee. It shows the interest accrued, any fixed compensation, the total now due, and how much it grows each day.
How to use this tool
- 1Enter the invoice amount and choose the currency.
- 2Enter the original due date. The 'as of' date defaults to today; change it to value the fee on a specific date.
- 3Choose a method: UK statutory, a custom annual rate (APR), a monthly rate, or a flat fee.
- 4Enter the rate the method needs. For UK statutory, set the current base rate and choose whether to add fixed compensation.
- 5Read the total now due as the headline, plus the interest accrued, fixed fee, and the amount it grows per day.
Formula used
Example
Invoice 5,000, due 30 days ago, base rate 5.25%. Statutory rate is 8% + 5.25% = 13.25% per year. Daily interest = 5,000 x 13.25% / 365 = 1.815/day, so 30 days = 54.45 interest. Debt is between 1,000 and 9,999.99, so fixed compensation is 70. Total late fee 124.45; total now due 5,124.45.
Invoice 1,200, 45 days overdue, contract charges 1.5% per month. Monthly interest = 1,200 x 1.5% = 18, pro-rated over 45/30 days = 27 interest. With no fixed fee, the total now due is 1,227, growing by about 0.60 per day.
Common use cases
- Freelancers deciding what late fee to put on a payment reminder for an overdue invoice
- UK businesses applying statutory interest and compensation under the Late Payment of Commercial Debts rules
- Anyone with a contract that charges 1.5% per month working out the interest to date
- Checking how much an overdue balance is growing each day before chasing a client
- Producing a clear interest figure to attach to a final-notice letter
Common mistakes
- Charging interest with no contractual or statutory basis - you can only add a late fee your contract allowed for or that the law permits.
- Using an out-of-date base rate - the UK statutory rate depends on the Bank of England base rate, which changes, so check the current figure.
- Counting from the invoice date instead of the due date - interest runs from the day after payment was due.
- Compounding when your terms specify simple interest - most late payment clauses use simple interest, which this tool calculates.
- Forgetting the fixed compensation - UK commercial debt rules allow a fixed sum on top of interest as well.
Frequently asked questions
How is late payment interest calculated?
Interest is normally simple daily interest: the invoice amount multiplied by the annual rate, divided by 365, multiplied by the number of days the invoice is overdue. For example, 1,000 overdue by 30 days at 8% per year is 1,000 x 8% / 365 x 30 = 6.58. A monthly rate works the same way but uses the monthly percentage pro-rated over the days overdue.
What is UK statutory interest for late commercial payments?
Under the Late Payment of Commercial Debts rules, businesses can charge interest at 8% above the Bank of England base rate on overdue commercial invoices, plus fixed compensation of 40 for debts under 1,000, 70 for debts up to 9,999.99, and 100 for debts of 10,000 or more. This tool applies those rules when you choose the UK statutory method.
Can I charge a late fee on any invoice?
Not automatically. You can charge a late fee if your contract or invoice terms stated one, or where a statutory right to interest applies, such as UK commercial debts. If neither applies, a late fee may not be enforceable. Always set out your late payment terms in advance on your invoices and contracts.
What is the difference between simple and compound interest here?
Simple interest is charged only on the original amount, no matter how long it stays unpaid. Compound interest would add unpaid interest to the balance and charge interest on that too. Most late payment terms and statutory schemes use simple interest, which is what this calculator uses.
Is my data uploaded to a server?
No. The calculator runs entirely in your browser. The amounts and dates you enter are not sent anywhere and are not stored after you leave the page.
How accurate is this calculator?
The maths is accurate for simple daily and monthly interest and the UK fixed compensation bands. However, exact entitlements depend on your contract, your location, and the type of debt. This is an estimate to help you set a fair figure, not legal or financial advice - check your terms and local rules before charging a fee.
Related tools
Last updated