How this calculator works
Percent per month takes the invoice amount, multiplies by the monthly rate, and prorates it across the days late using a 30 day month. For example, a $1,500 invoice that is 20 days late at 1.5 percent per month comes to $1,500 x 1.5% x 20 / 30 = $15.00.
A one time percentage charges a single fee once the invoice is past due, no matter how many days late. A flat fee is a fixed dollar amount. A grace period is subtracted from the days overdue before any fee is calculated.
Before you add a late fee
- A late fee should be in your contract, quote or invoice terms before the work starts. Adding one afterward is hard to enforce.
- Many places cap late fees or interest, and some rules differ for consumers and businesses. Check the limits where you and your customer are located.
- State the fee in the same words everywhere, for example 1.5% per month on balances more than 30 days past due.
- A polite reminder before applying a fee often gets an invoice paid sooner than the fee does.
Questions
What is a reasonable late fee?
Common choices are 1 to 2 percent per month or a small flat fee. What is allowed depends on your location and your agreement, so check local limits and put the rate in writing before you rely on it.
Can I charge a late fee that is not in my contract?
That is risky. Late fees are much easier to enforce when the customer agreed to them in advance. If yours was not in the agreement, a reminder usually works better.
Is a 30 day month right for every case?
It is a common simplification. If your contract defines interest differently, such as using actual days in the year, follow the contract.
Related guide: Late Fees on Invoices
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General information, not legal, tax or accounting advice. Rules vary by place.