Late Fee Calculator

Calculate late fees on overdue invoices based on your interest rate and days overdue. Get a professional late fee notice template too.

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Calculation Results

Original Amount
$1,000.00
Late Fee
+$9.86
Total Owed
$1,009.86

Based on 12% annual interest (0.0329% daily) over 30 days.

How to Charge Late Fees on Invoices

A late fee is an additional charge applied when a client fails to pay an invoice by the agreed due date. Charging late fees encourages clients to pay on time and compensates you for the cost of delayed payment. The key is to establish your late fee policy upfront — include it in your contract and on every invoice before any payment becomes overdue.

Legal Considerations by Region

  • United States: Late fee rates are governed by state usury laws and typically range from 1-1.5% per month. The SBA recommends documenting payment terms clearly in contracts.
  • United Kingdom: The Late Payment of Commercial Debts Act allows 8% + Bank of England base rate on B2B transactions.
  • European Union: Directive 2011/7/EU provides a framework for late payment interest on commercial transactions, with a minimum of 8% above ECB reference rate.
  • Australia: No specific late payment legislation, but the PPSA and contract law govern interest charges. Rates must be "reasonable" to be enforceable.

Late Fee Calculation Formula

The standard late fee formula is: Late Fee = Invoice Amount × (Annual Rate ÷ 365) × Days Overdue. For example, a $5,000 invoice at 12% annual interest that is 45 days overdue incurs a late fee of $5,000 × 0.0329% × 45 = $73.97.

Frequently Asked Questions

What is a typical late fee percentage?

Most businesses charge between 1% and 1.5% per month (12-18% annual). Flat fees of $25-$50 are also common for smaller invoices. Always check your jurisdiction's maximum rate before setting your policy.

Do I need to state late fees on the original invoice?

Yes. For late fees to be enforceable, they must be communicated before the payment is due. Include your late fee policy on every invoice and in your contract or terms of service. Learn more about invoice payment terms.

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