Late Fee Calculator — price the delay, to the cent
An overdue invoice, your late-fee policy, the days elapsed — and out comes the exact fee and the new balance due, whether you charge per month, annual interest, or a flat amount.
The three ways businesses charge for lateness
Percent per month (most common: 1–2%/month, prorated by day here so 20 days at 1.5% isn't the full month's charge). Annual interest, accrued daily — the formulation contracts and lawyers prefer. Flat fee — simple and predictable for small invoices, where percentages produce fees too small to matter. Whichever you use, the non-negotiable part is that it was stated up front: on the estimate, in the terms, on the invoice.
Worked examples
| Balance | Policy | Days late | Fee | New balance |
|---|---|---|---|---|
| $1,000 | 1.5% / month | 20 | $10.00 | $1,010.00 |
| $1,000 | 1.5% / month | 45 | $22.50 | $1,022.50 |
| $2,400 | 18% annual | 30 | $35.51 | $2,435.51 |
| $350 | $25 flat | — | $25.00 | $375.00 |
Keep it legal, keep it stated
Late fees are enforceable when they were agreed to and within your jurisdiction's limits — Canada caps interest at the criminal rate (a 35% annual rate for most new agreements since January 1, 2025), and US states set their own ceilings. The practical rules: put the policy in writing before the work, keep the rate modest, label the fee clearly on the invoice, and never spring it on a client as a surprise. This page is general information, not legal advice — for edge cases, ask a professional.
The fee is step two — the reminder is step one
Most late invoices are forgetfulness, not refusal. Send a payment reminder first — friendly, then firm — and reserve the fee for the invoices that ignore both. When it's time, tap “Add this to an invoice” and the free generator opens ready to carry the fee as its own labelled line, with the new total computed by code. Prevention for next time: clear due dates and terms on every invoice — the generator writes both automatically.
Frequently asked questions
How do I calculate a late fee on an invoice?
Three common methods: a monthly percentage (balance × rate ÷ 100, prorated by days ÷ 30), annual interest (balance × rate ÷ 100 × days ÷ 365), or a flat fee stated on the invoice. A $1,000 invoice at 1.5%/month, 20 days late, accrues $10.00. The calculator handles all three modes.
What is a typical late fee percentage?
Common practice among small businesses is 1% to 2% per month (roughly 12–24% annually) or a modest flat fee. What matters more than the number is that the fee was stated on the invoice or contract before the work — a surprise fee is where disputes start.
Can I legally charge late fees?
Generally yes, if the client agreed to them — put the policy in your terms and on every invoice. Jurisdictions cap what you can charge: in Canada, the criminal interest rate ceiling applies (lowered to a 35% annual rate for most agreements as of January 1, 2025), and US states have their own interest limits. When in doubt, stay modest and check your local rules.
Do I charge tax on a late fee?
In Canada, a late payment charge on a taxable sale is generally treated as part of the consideration — many businesses avoid the complexity by using interest framed as a financing charge; ask your accountant how to book it. Practically: keep the fee its own clearly-labelled line on the invoice either way.
When should the late fee start?
From the day after the due date — which means the invoice needs a clear due date to begin with (Net 14 and Net 30 are the common conventions). Days overdue in the calculator counts from that date, and the free generator puts a due date on every invoice automatically.
Should I actually charge the fee, or just threaten it?
The policy's real job is speed, not revenue — invoices with a stated late fee get paid faster. Many businesses waive the first fee for a good client who pays on a reminder, and charge it for repeat offenders. Send the reminder first; the fee is the escalation.
How do I add the fee to the invoice?
Reissue or follow up the invoice with a line like “Late payment fee — 1.5%/mo, 20 days past due” at the computed amount, so the new balance is transparent. Tap “Add this to an invoice” and the generator opens ready for exactly that line.