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Late fee clauses are usually written as an annual percentage rate, but applying that rate to a specific number of overdue days means prorating it down to a daily rate first. This calculator finds the exact late fee owed on an overdue invoice from its annual late fee rate and the number of days overdue.
How it works
Enter the invoice amount, the annual late fee rate stated in your payment terms, and the number of days the payment is overdue. The calculator converts the annual rate to a daily rate and applies it over the overdue period.
- Enter invoice amount ($).
- Enter annual late fee rate (%).
- Enter days overdue.
- Click Calculate to see your results.
Examples
A $2,000 invoice, 18% annual rate, 30 days late
This generates a late fee of $29.59, bringing the total amount due to $2,029.59.
Who should use it
- Calculating the exact late fee to add to an overdue client invoice.
- Checking what a proposed late fee rate would actually cost a client for various overdue periods.
Industry applications
- Freelance and small business invoicing
- Accounts receivable management
Advantages
- Correctly prorates an annual rate down to the actual overdue period.
- Reports both the late fee and the resulting total amount due.
Limitations
- Uses simple daily proration only — doesn't model tiered or compounding late fee structures some contracts use.
Common mistakes to avoid
- Charging a late fee rate not clearly disclosed in the original payment terms or contract, which can make it unenforceable.
- Using a compounding calculation when your payment terms specify simple interest, or vice versa.
Best practices
- Always state your late fee rate and terms clearly on the original invoice or contract, since a late fee is generally only enforceable if it was previously disclosed and agreed to.
Tips
- Check your local jurisdiction's maximum allowable late fee or interest rate before setting your payment terms, since limits vary significantly by location.