How to calculate a late payment fee
Late payment charges are usually interest on the unpaid amount for each day it is late, sometimes with a flat fee. Interest = invoice amount × rate × days late ÷ days in the period. A $2,000 invoice that is 30 days late at 1.5% a month costs the client $30 in interest; with a $25 late fee the total due is $2,055.
UK: statutory interest on late business payments
Under the Late Payment of Commercial Debts (Interest) Act 1998, businesses can charge interest on late B2B invoices at 8% plus the Bank of England reference rate — 11.75% a year for invoices that became late between 1 July and 31 December 2026 (reference rate 3.75%). You can also claim fixed compensation:
| Invoice amount | Fixed compensation |
|---|---|
| Up to £999.99 | £40 |
| £1,000 – £9,999.99 | £70 |
| £10,000 or more | £100 |
For example, a £2,000 invoice paid 30 days late earns £2,000 × 11.75% × 30 ÷ 365 = £19.32 interest plus £70 compensation. This applies to business clients only, not consumers.
United States and other countries
There is no single national rule in the US — the maximum interest you can charge depends on your state, and you can only charge what the client agreed to. 1–1.5% a month is common in contracts. In every country, state your late fee in the contract and on each invoice.
Getting paid faster
- Send a polite reminder a few days after the due date, then a firm one, then a final notice — the calculator writes all three with the right amounts.
- Ask for a deposit before you start the next project.
- Make paying easy: clear due date, payment link and bank details on every invoice.
Not legal advice. Check the rules for your country and your contract.
Work out what a late client owes
- Enter the invoice amount, the due date and the date it was paid (or today).
- Choose how interest is charged: % per month, % per year, UK statutory or a flat fee only.
- Add a flat late fee and a grace period if your terms have them.
Example
A $2,000 invoice paid 30 days late at 1.5% a month costs the client about $30 in interest, plus the $25 flat fee in your terms.
UK statutory interest
For business-to-business invoices in the UK, the Late Payment of Commercial Debts (Interest) Act allows interest of 8% above the Bank of England base rate, plus fixed compensation of £40, £70 or £100 depending on the debt size. Elsewhere, you can usually charge only what your contract or invoice terms say.
Send a reminder in the right tone
Add the client name and invoice number and copy a ready email:
- Polite: a friendly nudge just after the due date.
- Firm: a clear request with the amount and new deadline.
- Final: a last notice before further action.
Tip: put your late-payment terms on every invoice from the start — clients pay faster when the rules are clear. The invoice generator has ready terms you can add.