Late Payment Interest Calculator
Instantly calculate the interest owed on overdue invoices. Enter your invoice amount, overdue days, and interest rate to see exactly what your client owes.
The total amount of the unpaid invoice
Number of days since the payment due date
Common rates: 18% (1.5%/mo) to 24% (2%/mo). Check your invoice terms or local regulations.
Enter invoice details to calculate interest
Automate Late Fee Calculation
Eonebill lets you add automatic late fees to invoices and tracks overdue payments — no manual math required.
Common Scenarios
| Example | Result |
|---|---|
| $5,000 invoice, 30 days overdue, 18% APR | $73.97 interest |
| $2,000 invoice, 60 days overdue, 24% APR | $78.08 interest |
| $10,000 invoice, 90 days overdue, 15% APR | $369.86 interest |
Understanding Late Payment Interest on Invoices
Late payment interest — also called a finance charge or penalty interest — is a contractual or statutory charge applied when a client fails to pay an invoice by its due date. It serves two purposes: compensating the creditor for the time value of money and incentivizing timely payment.
In the United States, commercial late payment interest rates are typically governed by the parties' agreement (the invoice or contract terms), or by state usury laws if no rate is specified. The federal Prompt Payment Act sets late fee standards for government contractors. Many businesses use monthly rates of 1.5% to 2% (18–24% APR) as a standard commercial charge.
The formula used here — Daily Rate = Annual Rate ÷ 365, then multiplied by days overdue and invoice amount — is the most common convention in commercial invoicing. Some jurisdictions or contracts use monthly compounding or a flat fee structure instead, so always verify against your specific invoice terms.
Importantly, charging excessively high late fees can be unenforceable in some states. Always ensure your stated late fee policy is reasonable and complies with local consumer protection laws.
Frequently Asked Questions
- What is late payment interest?
- Late payment interest (also called a finance charge or penalty interest) is the extra amount a client owes when they don't pay an invoice by the due date. It's calculated as a percentage of the outstanding amount per day (or month) of overdue payment.
- How is the daily interest rate determined?
- The daily interest rate is derived by dividing the annual interest rate by 365. For example, a 12% annual rate equals a daily rate of approximately 0.0329%. This daily rate is then multiplied by the number of overdue days and the invoice amount.
- What annual interest rate should I use?
- The rate depends on your invoice terms, industry norms, and local regulations. Common defaults range from 1.5% to 2% per month (18–24% APR). Some states or countries have statutory limits — check your local business laws or invoice terms for the applicable rate.
Ready to eliminate overdue invoices for good?
Eonebill automates payment reminders, late fees, and online payments — so you get paid faster without chasing.