Late Payment Interest Calculator
Interest Calculation
Enter invoice details to calculate late payment interest
Invoice Details
$
Interest Rate
%
Common rates: 1-2% per month (12-24% annually)
Quick select:
Compounding Method
How to Calculate Late Payment Interest
1
Enter Invoice Amount
Enter the original invoice amount that was due for payment.
2
Set the Dates
Enter the original due date and the actual or expected payment date.
3
Choose Interest Rate
Select or enter your annual interest rate. Use presets for common rates.
4
Select Compounding Method
Choose simple, daily, or monthly compounding based on your terms.
Frequently Asked Questions
What interest rate should I charge for late payments?
Common late payment interest rates range from 1-2% per month (12-24% annually). Many businesses use 1.5% monthly (18% annually). Check your local laws for maximum allowable rates, and ensure your payment terms are clearly stated on invoices.
What's the difference between simple and compound interest?
Simple interest is calculated only on the original amount owed. Compound interest is calculated on the principal plus any accumulated interest. For most invoice late fees, simple interest is standard and easier to calculate. Compound interest results in higher charges over longer periods.
Can I legally charge interest on late payments?
Yes, in most jurisdictions you can charge interest on late payments if it's specified in your contract or payment terms. The terms should be clearly stated on your invoices before the service is provided. Maximum rates vary by location - check local usury laws for limits in your area.
Is this late payment interest calculator free?
Yes, this calculator is completely free with no limits. Calculate late payment interest for as many invoices as you need without signing up or paying anything.
How do I add late payment terms to my invoices?
Include a clear statement like: "A late fee of 1.5% per month (18% annually) will be applied to balances not paid within 30 days of the invoice date." Place this in your payment terms section on every invoice. With Invoicer.ai, you can set default payment terms that automatically appear on all your invoices.