Late Fee / Overdue Invoice Calculator

Calculate late fees on overdue invoices with flat fee or interest rate methods.
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Late Fee Type
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Use the Late Fee / Overdue Invoice Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

Our Late Fee / Overdue Invoice Calculator helps businesses accurately determine the additional costs incurred on unpaid invoices, whether through a flat fee or an interest rate. In 2026, with the average U.S. small business experiencing a 7% increase in overdue payments compared to 2025, effectively managing these outstanding balances is crucial for cash flow. This tool empowers you to enforce payment terms consistently and recover legitimate costs, bolstering your financial health.

This calculator uses two primary methodologies. For the interest rate method, the daily interest rate is calculated by dividing the annual interest rate by 365, then multiplied by the overdue amount and the number of overdue days. The flat fee method simply adds a predetermined fixed charge to the original invoice amount once it becomes overdue.

When setting late fees, ensure they are clearly communicated in your original invoice terms and comply with local regulations, as some jurisdictions have caps on permissible late charges. Avoid excessively high fees that could be deemed punitive and unenforceable. Remember that the goal is to incentivize timely payment, not to generate significant revenue from penalties.

Example: Calculating a Late Fee for a 2026 Overdue Invoice

  1. 1 Imagine an invoice for $1,500 due on October 1, 2026. As of October 21, 2026, it remains unpaid. Your terms specify a 1.5% monthly interest rate for overdue invoices.
  2. 2 The invoice is 20 days overdue (October 21 - October 1). The annual interest rate is 1.5% * 12 months = 18%. The daily interest rate is 18% / 365 = 0.049315%. The late fee is calculated as: $1,500 * 0.00049315 * 20 days.
  3. 3 The calculated late fee is $14.79. The new total amount due on the invoice is $1,500 + $14.79 = $1,514.79.
  4. 4 This $14.79 represents the additional cost incurred due to the delay in payment. Promptly applying and communicating these fees helps encourage faster payment behavior and mitigates the financial impact of overdue invoices on your business's 2026 cash flow projections.

Source: SBA — Business Guide · Last updated: April 2026

Frequently Asked Questions

How much can I charge for late payment on an invoice?
Common late fees are 1-2% per month (12-24% annualized) or a flat fee of $25-$50. Some states cap late fees, so check your state laws. The fee must be disclosed in your contract or on the invoice to be enforceable.
When can I start charging a late fee on an invoice?
You can charge a late fee once the invoice due date passes, provided your payment terms specify the fee. Most businesses set payment terms of Net 30 and begin charging interest on day 31.
How do I calculate interest on an overdue invoice?
For simple monthly interest: overdue amount times monthly rate times number of months overdue. A $5,000 invoice at 1.5% per month that is 3 months overdue accrues $225 in interest (5000 x 0.015 x 3).

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