Late Payment Fee Calculator
Interest you can charge if your contract allows it
$36.99
If your contract allows it, you can add this to the outstanding invoice, bringing the total owed to $2,536.99.
- Unpaid invoice
- $2,500.00
- Total owed, invoice plus interest
- $2,536.99
Contractual interest at 12% a year, simple daily accrual.
How this is calculated
In the United States late payment fees are contractual rather than statutory. There is no national rate you can fall back on, and what you may charge is whatever your contract or your accepted terms of business says you may charge, subject to state usury limits that vary widely. That is why this tool asks for the rate rather than asserting one: a calculator that invented a figure would be confidently wrong for most of the people using it. Given a rate, the interest is accrued as simple daily interest, which is the ordinary reading of an annual percentage applied to a debt: the unpaid amount is multiplied by the annual rate, then by the fraction of a year the payment has been outstanding. Every amount is held internally as a whole number of cents, so the figure you see is exact rather than a rounded approximation of a floating point result.
Worked example
Forty-five days is 45/365 of a year. Twelve percent of $2,500.00 is $300.00 a year, and 45/365 of that is $36.99. Added to the original $2,500.00, the client now owes $2,536.99.
Inputs: $2,500.00 unpaid, 45 days overdue, 12% a year agreed in the contract
Result: $36.99 of interest, bringing the total owed to $2,536.99
What this assumes
- Interest is calculated as simple daily interest, not compounded.
- A year is 365 days. Some contracts specify 360; check yours if the sums matter.
- The rate you enter is the one your contract permits. This tool does not check it against your state's usury limit.
Questions
- Can I charge a late fee if my contract does not mention one?
- In the United States, generally not. Late fees are a contractual right, so if nothing was agreed there is usually nothing to charge. Add a late payment clause to your terms before the next engagement rather than trying to impose one after the fact.
- What rate is reasonable?
- One to one and a half percent a month, which is twelve to eighteen percent a year, is common for business-to-business work. States cap what you may charge and the caps differ, so check your own state before setting a rate high.
- Should I actually charge it?
- The fee is often more useful as leverage than as revenue. Many freelancers mention the accruing figure in a reminder and waive it once the invoice is paid, which gets the money moving without spending the relationship.
- Is this legal advice?
- No. It applies simple daily interest to the rate you typed in; it does not know what your contract says, and it does not know your state. Every state caps the interest a business may charge and the caps differ widely, with some counting a late fee toward that cap and some treating it separately. Check the rate against your own contract and your own state's usury limit before you send it, and take proper advice on a debt that is disputed or large.