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InvoiceBillingTemplateReady Utilities

Invoice Late Fee Calculator

By , Ready Utilities

Use the unpaid balance, including tax, unless your terms say otherwise.

Fee structure

Rate is per
If overdue for part of a month

Terms that say "per month or part of a month" mean the second option.

Interest applies to

Not sure of the date? Use the due date calculator.

The fee starts the day after the due date plus this many days.

Late fee

Enter the overdue amount and the due date to see the fee.

Clause for your terms

Late fee limits vary by state and by whether the customer is a business or a consumer. This shows the math for the rate you entered; it does not confirm that rate is allowed where you are. A fee that was not in your terms before the work is hard to enforce.

On this page

How to use this tool

  1. 1. Enter the overdue amount and the due dateEnter the overdue amount and the due date, and this late fee calculator works out what is owed; use the unpaid balance including tax, unless your terms say otherwise.
  2. 2. Match the fee structure to your termsFlat, percentage, or both; per month or per year; prorated by day or charged for any part of a month; simple or compound.
  3. 3. Read the fee and copy the clauseThe sheet shows how the number was reached and writes the clause that matches your inputs.

What this calculator does

It works out the late fee or interest on an overdue invoice from the amount, the fee structure in your terms, and the dates, then writes the clause that matches. The terms themselves are one of the fields covered in the guide to what is an invoice. A late fee only holds up if it was in your terms before the work started, as Invoice Simple and Ramp both note. Limits vary by state, and this page lists none of them.

How the fee is calculated

The clock starts the day after the due date plus any grace period, and runs to the payment date, the convention Paidnice describes. A monthly rate is prorated over a 30-day month unless your terms charge for any part of a month. Simple interest applies the rate to the original amount; compound interest applies it to the growing balance, a distinction the Stacker small business guide spells out.

Flat fee
Fee = the flat amount, charged once after the grace periodExample: on any overdue invoice.
Monthly rate, prorated by day
Fee = amount × monthly rate × days overdue ÷ 30
Monthly rate, full month for any part of a month
Fee = amount × monthly rate × (months started)
Annual rate, applied daily
Fee = amount × (annual rate ÷ 365) × days overdue

The same overdue invoice three ways

A $5,000 invoice due with a 5-day grace period, 1.5% per month, paid today: days overdue after grace.

MethodFee
Prorated by day over a 30-day month
Full month for any part of a month
18% per year applied daily

Wording you can copy

A late fee of 1.5% per month, prorated by day, applies to any balance unpaid more than 5 days after the due date.
A flat late fee of $35.00 applies to any balance unpaid more than 5 days after the due date.
A flat late fee of $35.00 applies to any balance unpaid more than 5 days after the due date, plus 1.5% per month on the outstanding balance.

This calculator was built by Ready Utilities. The fee structures and proration conventions were checked against published guidance from Paidnice, Ramp, Invoice Simple, and Stacker's small business guide. No state cap figures are published here because the secondary sources checked disagree with each other, and this site does not restate law it has not verified against the statute. The conventions are reviewed when that guidance changes; the site stores nothing you enter.

Frequently asked questions

How much should I charge for a late fee on an invoice?

The recognized convention is 1% to 1.5% per month on the overdue balance, which is 12% to 18% a year. Small invoices often carry a flat fee of $25 to $50 instead, and some terms use the greater of the two. Whatever you choose, it has to be in your terms before the work starts.

Is a 10% late fee legal?

It depends on your state and your contract. Fees have to be disclosed in advance and reasonable, and rates above about 2% per month are more likely to be disputed or limited by state law. This page does not list state figures because published sources contradict each other; check the statute for your state or ask a professional.

Can I add a late fee after the invoice is already overdue?

Not reliably. Every source we checked agrees that a fee not written into the contract or the invoice terms before the work is hard to enforce. You can add the clause to your next invoice for future work.

Should the late fee compound each month or stay simple?

Simple interest applies the rate to the original overdue amount every period, which is what most invoice terms mean and the easiest number to defend in a reminder. Compound interest applies it to the growing balance. Say which one you use in your terms.

What does "per month or part of a month" mean for the fee?

It means the full monthly fee is charged for any month that has started, so an invoice 31 days late owes two months of fees. Without that wording, most businesses prorate by day over a 30-day month. The calculator offers both.

What is the difference between a late fee and late payment interest?

A late fee is usually a one-time charge, flat or a percentage, applied once the grace period passes. Late payment interest accrues for as long as the balance stays unpaid. Many terms combine the two.

What if the client pays the invoice but not the fee?

Deposit the payment. Then decide whether to waive the fee, carry it forward on the next statement, or pause further work until it is settled. A guide on that choice is planned for this site.

Sources

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