How do I calculate late payment interest on an invoice?

Multiply the outstanding balance by the annual interest rate, then by the number of days overdue divided by 365. Add that interest to the original balance to get the total amount due.

When does late payment interest start?

Interest typically starts after the invoice due date. If the payment or calculation date is on or before the due date, this calculator shows $0 interest and marks the invoice as not overdue.

Is late payment interest the same as a late fee?

No. A late fee is usually a set charge—flat or percentage—added when an invoice is overdue. Late interest accrues over time on the unpaid balance based on an annual rate and the number of days overdue.

Does this calculator use compound interest?

No. It uses simple interest with an Actual/365 day count: interest = principal × annual rate × days overdue ÷ 365.

Late Payment Interest Calculator

Calculate interest accrued on an overdue invoice balance.

Interest summary

Total amount due

$2,000.00

Days overdue: 0
Original invoice amount: $2,000.00
Interest accrued: $0.00
Total amount due: $2,000.00
Effective interest (overdue period): 0.0%

Allowable interest rates and late-payment rules vary by jurisdiction and contract. This calculator does not determine what rate you are legally permitted to charge.

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How late-payment interest is calculated

This calculator uses simple interest with an Actual/365 day count. Interest accrues only for calendar days after the invoice due date through the payment or calculation date.

Interest = Outstanding amount × (Annual rate ÷ 100) × (Days overdue ÷ 365)

Total amount due = Outstanding amount + Interest

Example: A $2,000 invoice is 30 days overdue at an 18% annual rate. Interest = $2,000 × 0.18 × (30 ÷ 365) ≈ $29.59. Total amount due ≈ $2,029.59.

Late interest vs. a late fee

Late interest accrues over time on the unpaid balance. A late fee is usually a one-time flat or percentage charge. Use the Late Payment Fee Calculator when your terms call for a fee instead of (or in addition to) interest.

Rates and legal limits

Allowable interest rates and late-payment rules vary by jurisdiction and contract. Confirm that any rate you charge is permitted by your agreement and applicable law. This tool estimates interest from the numbers you enter—it does not provide legal advice.

Frequently asked questions

How do I calculate late payment interest on an invoice?: Multiply the outstanding balance by the annual interest rate, then by the number of days overdue divided by 365. Add that interest to the original balance to get the total amount due.
What interest rate can I charge on a late invoice?: Allowable rates and late-payment rules vary by jurisdiction and contract. This calculator does not determine what rate you are legally permitted to charge—confirm the rate in your agreement and applicable law.
When does late payment interest start?: Interest typically starts after the invoice due date. If the payment or calculation date is on or before the due date, this calculator shows $0 interest and marks the invoice as not overdue.
Is late payment interest the same as a late fee?: No. A late fee is usually a set charge—flat or percentage—added when an invoice is overdue. Late interest accrues over time on the unpaid balance based on an annual rate and the number of days overdue.
Does this calculator use compound interest?: No. It uses simple interest with an Actual/365 day count: interest = principal × annual rate × days overdue ÷ 365.

Create the invoice with the Invoice Generator. Calculate a late fee with the Late Payment Fee Calculator, find the due date with the Invoice Due Date Calculator, or model early-pay savings with the Early Payment Discount Calculator. Check totals in the Invoice Calculator. For policy wording, see Invoice Late Fees and Invoice Payment Terms, or browse All Calculators.