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What is an overdue invoice costing you?
An overdue invoice quietly loses value. Enter the amount, the annual rate in your contract and the days late, and the calculator returns simple interest, the total now due and the daily cost of waiting.
Estimate for simple interest only. Excludes compounding, VAT or GST on the interest, statutory caps, collection costs and contract-specific terms. Check your agreement before invoicing a late fee.
Simple interest on an overdue invoice
The calculation multiplies the invoice amount by the annual rate and by the fraction of the year the payment is late. At 8 percent on 2,500 dollars over 45 days, the interest is about 24.66 dollars. Daily interest is the annual charge divided by 365, and the monthly equivalent multiplies that daily figure by 30.
This is simple interest: the charge accrues on the invoice amount only. It does not compound, and it does not add unpaid interest to the principal each month. Change the days late field to see how quickly the charge grows while a client delays.
The contract sets the rate
The rate in your contract or purchase order overrides any default here. Many freelance agreements specify a monthly rate, a flat late fee, or a reference to a statutory rate; convert a monthly rate to annual by multiplying by twelve before entering it.
Some jurisdictions cap late-payment interest or require a statutory rate for business-to-business invoices. Check the applicable rule before quoting a figure to a client, especially when the contract is silent on late payment. A clear clause in future contracts avoids arguments about whether interest applies at all, and at what rate from which date it starts to accrue.
Using the number in a reminder
Put the calculation in the reminder email: invoice number, due date, days late, rate, interest and total due. A specific, polite number is harder to ignore than a vague request for payment, and it creates a clear record if the dispute escalates.
The total due output adds the fixed fee you enter, which can cover admin or bank charges when the contract allows it. Keep the fee separate from interest so the client can see how each part was calculated. Send the reminder as soon as the due date passes; waiting makes the interest look like an afterthought.
Frequently asked questions
Which interest rate should I use?
The rate written in your contract or invoice terms. If there is none, check whether your jurisdiction sets a statutory rate for late commercial payments before choosing a number.
Simple or compound interest?
This tool uses simple interest on the invoice amount. Some contracts compound monthly; in that case the result here understates the charge, so use the method in the contract.
Why divide by 365?
The annual rate is spread across a 365-day year to get a daily charge. Some contracts use a 360-day basis; if yours does, the daily figure will be slightly higher.
Can I charge a fixed late fee as well?
Only if your contract or the applicable rules allow it. Enter the fee in the fixed fee field and it is added to the total, but it is shown separately from interest.