Free Late Payment Interest Calculator for Freelancers & Creators

How late payment interest is calculated

Late payment interest is calculated using simple daily interest: take your annual interest rate, divide by 365 to get a daily rate, then multiply by the number of days the invoice is overdue and the original invoice amount. The formula is: Interest = Principal × (Annual Rate ÷ 365) × Days Overdue. This matches the approach used in most contracts and statutory late payment legislation worldwide.

What interest rate should I use?

The rate depends on what's in your contract. If you specified a late payment clause (e.g. "1.5% per month" or "8% per annum"), use that rate. If your contract is silent, many countries have a statutory rate you can fall back on — in the UK this is 8% above the Bank of England base rate for business-to-business invoices. In the US, rates vary by state. For creators doing brand deals, building a late payment clause into your standard terms is one of the most effective ways to get paid faster. If you need help sending a professional invoice with clear terms, use our free invoice generator.

How to charge a client for late payment

• Send a formal follow-up invoice. Issue a new invoice referencing the original, with the interest amount added as a separate line item. Keep the original invoice number on it for clarity.
• Reference your contract. In the email, explicitly cite the late payment clause from your original agreement. This removes ambiguity and makes the charge undeniable.
• Escalate in writing, not verbally. Always chase payment by email so you have a paper trail. If the situation escalates to small claims court, this documentation is essential.
• Know when to stop and write it off. Interest accruing doesn't help if the client simply doesn't pay. After 60–90 days, consider whether mediation or a collections agency is appropriate.