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Late Fee Calculator

Compute the right late payment fee for your country in three seconds. Statutory rates for the EU, UK, US, Canada, AU — plus simple, monthly, and compound methods. Copy the breakdown straight into your reminder email.

— Invoice details
— Rate & jurisdiction

Source: No federal statute. State usury caps apply (typically 18-24% APR).

No statutory flat fee in the US — set one in your contract if you want.

— Breakdown
Total now due
$1,209.00
15 days late
  • Original amount$1,200.00
  • Days late15
  • Interest accrued$9.00
  • Total now due$1,209.00
Simple monthly (1.50%/mo × 0.50 months)
  • Monthly rate1.500% per month (18% APR ÷ 12)
  • Months late0.500 months (15 days ÷ 30)
Reminder text
Original amount: $1,200.00
Originally due:  2026-04-15
Today:           2026-04-30
Days late:       15
Late interest:   $9.00
  Simple monthly (1.50%/mo × 0.50 months)

Total now due:   $1,209.00

How late payment fees actually work

A late payment fee has two parts: time-based interest that accrues every day the invoice goes unpaid, and (in some jurisdictions) a one-time fixed compensation for the cost of collecting. The calculator above handles both — pick a jurisdiction preset, enter the invoice details, and the breakdown shows exactly how the math works.

The two interest methods you will see in real contracts are simple-annual ("8% APR" — a percentage of the principal per year, prorated by days) and simple-monthly ("1.5% per month" — a percentage of the principal per month, prorated to the day). The monthly form looks gentler but compounds to ~18% APR — always convert to APR before comparing.

  • Daily interest: principal × (rate% / day basis) × days late. Most contracts use 365-day basis; some banks use 360.
  • Monthly interest: principal × (monthly rate%) × (days late / 30). Equivalent to APR ÷ 12 per month.
  • Compounding: rare in B2B contracts, common in consumer credit. Skip unless your contract explicitly says compounding.
  • Flat fee: a one-time charge added to cover collection costs (€40 in the EU, £40+ in the UK).

What rates are legal where you operate

Late fee rates are not arbitrary. Most jurisdictions cap them implicitly via usury laws, and several explicitly set a statutory rate that takes precedence over your contract terms. Picking a rate that exceeds the statutory cap means a court will throw out your fee entirely — you collect nothing.

In the EU, the Late Payment Directive (2011/7/EU) sets the minimum statutory rate at the ECB reference rate plus 8 percentage points (~12.25% APR as of 2026). It is mandatory for B2B transactions and a contract clause for less is unenforceable. In the UK, the equivalent law (Late Payment of Commercial Debts Act) gives 8% above the Bank of England base rate (~13.25% APR) and a tiered fixed compensation: £40 / £70 / £100 depending on invoice size.

In the US, there is no federal statute — states set usury caps that range from 12% to 36% APR. Most B2B contracts use 1.5% per month (~18% APR), which is enforceable in nearly every state. Canada similarly leaves it to provinces; common practice is 2% per month. Australia has no federal late-fee law at all — what your contract says is what applies.

  • EU: minimum 8% above ECB reference rate, plus €40 flat fee per invoice. Cannot be contracted out of for B2B.
  • UK: 8% above BoE base rate, tiered flat fee (£40-£100). Can claim recovery costs above the flat if reasonable.
  • US: state-by-state. 1.5%/mo (~18% APR) is the safest default and accepted in nearly all states.
  • Canada: 2%/mo is common; provinces cap usury independently. Federal Interest Act sets 60% as the absolute ceiling.
  • Australia / NZ: no federal late-fee statute. Whatever your contract says applies — keep it reasonable.

When you can actually charge a late fee

You can charge a late fee when (a) your contract says so in writing, or (b) the law of your jurisdiction sets a statutory rate. Without one or the other, charging interest is unenforceable and the client can refuse without consequence.

In practice the cleanest path is to put the rate in your contract — even in EU/UK jurisdictions where statutory rates apply by default. Listing the rate explicitly avoids the ambiguity of "what is the current ECB reference rate today?" and makes it visible during the negotiation. Late fees mentioned in your invoice but not in the contract are usually unenforceable in court — make sure they are in the agreement first, then echo on the invoice as a reminder.

  • In the contract: a "Late Payment" clause stating the APR (e.g. "1.5% per month") and any flat fee. This is the foundation.
  • On the invoice: a footer reminding the client of the late fee terms — does not create the right but reinforces it.
  • In the reminder: after the due date passes, every reminder should restate the running total including accrued interest.
  • In court: EU and UK statutory rates are enforceable even without contract language. Most other jurisdictions need explicit terms.

How much is reasonable — and what backfires

Reasonable late fees stay below 24% APR (2% per month) for most freelancer/SMB work. Above that, you start triggering usury concerns in many US states and aggressive-collection optics that make clients dig in instead of paying.

A 1.5% monthly rate (≈18% APR) is the sweet spot — high enough to actually motivate payment, low enough that no one disputes it as unreasonable. Combined with a small flat fee ($25-50 USD or €40 EU statutory), it gives you a meaningful "this is going to cost you more every week" lever in your reminder emails.

What backfires: rates above 36% APR start losing in court even in lenient jurisdictions; aggressive flat fees ($100+) on small invoices read as predatory; calculating compound interest on a B2B invoice always reads as predatory unless the client is a fellow finance professional. Keep it simple, keep it documented, keep it reasonable.

  • Sweet spot: 1.5% per month (~18% APR) plus a small flat fee. Enforceable everywhere, motivates payment.
  • Aggressive but legal: 2% per month (~24% APR). Only with explicit contract language. Acceptable in commercial work.
  • Predatory zone: 3%+ per month. Often unenforceable, almost always backfires in client relationships.
  • Skip compounding: simple interest is universally accepted; compound is for credit cards and pawnbrokers, not invoices.

How to use this calculator with your reminder workflow

Run the calculator the day after the invoice goes overdue, then again every 7 days. Copy the breakdown into your reminder email so the client sees a real, growing number — not a vague threat.

A common pattern: the first reminder (Day +1) skips the late fee, the second (Day +7) introduces it, and the third (Day +14) adds the running total to the subject line. Most clients pay between the second and third reminder, before the math gets uncomfortable. The "Copy as text" button on the right exports a clean block you can paste into Gmail / your follow-up template.

  • Day +1: gentle reminder, no late fee mentioned.
  • Day +7: first late-fee reminder. Show the daily accrual rate so the next email cost is predictable.
  • Day +14: restate full breakdown. Put the total in the subject line: "Invoice INV-1042 — total now $1,247".
  • Day +30+: consider sending via certified mail / written demand letter; many small claims courts require a written demand before filing.

Frequently asked questions

  • Only if your contract says so or you operate in a jurisdiction with a statutory late-fee law (EU, UK). Charging a fee that is not in the contract is technically unenforceable in most US states and Australia. If your current contract is silent, add a "Late Payment" clause for the next one and use the calculator to show clients what they would owe.
— Stop chasing manually

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