Overdue Invoice Details
Overdue Fee Breakdown
Pre-fills our free generator with your original balance and a separate overdue fee line item.
Auto-Generated Payment Reminder Email
Copy and paste this professional chaser email to send alongside your updated PDF invoice.
How to Calculate Late Fees on Overdue Invoices
When a client fails to pay an invoice by the agreed Due Date, independent contractors, freelancers, and small businesses are legally entitled in most jurisdictions to charge overdue interest or a late payment administration fee. Calculating the exact penalty transparently—and listing it as a separate line item on an updated invoice—often prompts immediate settlement from slow accounts payable departments.
Method 1: Monthly Percentage Penalty (e.g., 1.5% per Month)
In the United States, Canada, and Australia, the most common freelance contract clause is a 1.5% to 2% monthly late fee (equivalent to 18%–24% annually). To calculate this pro-rata for the exact number of days overdue:
- Divide the monthly percentage by 30 to find the daily rate.
- Multiply the original invoice balance by the daily rate, then multiply by the number of days past the due date.
Method 2: Annual Statutory Interest Rate (APR)
For B2B transactions in the UK and European Union, commercial late payment legislation allows businesses to charge statutory annual interest (typically 8% plus the central bank base rate) alongside a fixed debt recovery compensation fee (such as £40 / €40). Use the Annual Interest Rate option above to compute the exact daily accrual:
Overdue Interest = (Invoice Amount × Annual Rate %) ÷ 365 × Days Overdue