Late Payment Interest Calculator

What is a late payment interest calculator?

A late payment interest calculator works out the interest owed on an overdue invoice or debt for a given number of days, at an annual rate — either simple or daily-compounded. It’s how you price the cost of someone paying late.

How this calculator works

• Enter the overdue amount, annual interest rate, and days overdue.
• Simple interest is amount × rate × (days ÷ 365).
• Daily compounding rolls interest into the balance each day.
• It shows the interest charge and the total amount owed.

How to use the result

1. Check the applicable statutory rate first — the UK and EU set late-payment rates by law, and contracts often specify their own.
2. Add the interest to your demand letter or invoice clearly — itemise it as a separate line.
3. Use simple interest for most invoice situations; compounding matters more for long-overdue balances.
4. Remember interest usually runs from the due date, not the invoice date — make sure your day count starts right.

How is late payment interest calculated?

Multiply the overdue amount by the annual rate and the fraction of the year that’s passed. On $5,000 at 8% for 90 days: $5,000 × 0.08 × (90/365) ≈ $98.63. Some agreements compound daily, which adds a little more the longer the debt runs.

Common mistakes

• Using the wrong day count. Interest runs from the due date, and some systems use 360-day years for commercial interest.
• Ignoring the statutory rate. Contractual rates may be capped by law — don’t charge more than the jurisdiction allows.
• Forgetting to itemise. A vague “late fees” line is harder to enforce than a transparent interest calculation.

Late-payment math is the same compounding engine as the loan calculator — just accruing in the creditor’s favour. If you’re the one chasing payment, the invoice generator keeps the original bill clean and on record.