What does a late invoice owe you?
Enter the invoice, the due date and the rule that applies. Get the interest, any fixed fee, the total to claim, and a reminder email with the numbers filled in.
Updated November 9, 2026 · By Mo Arfaj, founder of Creepless
Simple late payment interest = invoice amount × annual rate × days overdue ÷ 365. A $5,000 invoice paid 45 days late at 12% a year accrues $73.97. UK businesses can claim 8% above the Bank of England base rate plus a fixed £40–£100; in India, the MSMED Act sets compound interest at three times the RBI bank rate.
Late Payment Interest Calculator
The invoice
Interest rule
Use the late-payment terms in your contract. Without written terms, the statutory options may still apply to business-to-business invoices.
The late payment interest formula
Most invoice terms and the UK and EU rules use simple interest. India’s MSMED Act compounds monthly.
- Annual rate
- Your contract rate; 12 × the monthly rate; 8% + the reference rate for UK and EU rules; or 3 × the RBI bank rate under the MSMED Act.
- Reference rate
- UK: the Bank of England base rate on 31 December or 30 June. EU: the ECB main refinancing rate. Enter the current figure; it changes.
- Fixed fee
- UK: £40 under £1,000, £70 under £10,000, £100 from £10,000. EU: at least €40. Otherwise only what your terms say.
- Grace period
- Days after the due date before interest starts, if your terms allow one.
An £8,000 invoice under UK statutory interest
The invoice is paid 60 days late. With a base rate of 4% (for illustration), the statutory rate is 8% + 4% = 12% a year.
Interest = £8,000 × 0.12 × 60 ÷ 365 = £157.81. The debt is between £1,000 and £9,999.99, so fixed compensation is £70.
Total claim: £8,227.81, growing by £2.63 a day until it’s paid.
Late payment rules at a glance
The main rules the calculator supports. Each has conditions and exceptions; this is orientation, not legal advice.
| Rule | Interest | Fixed fee | Applies to |
|---|---|---|---|
| Your contract terms | Whatever was agreed, often 1–1.5% a month | If agreed | Clients who accepted the terms |
| UK: Late Payment Act 1998 | 8% + Bank of England base rate, simple | £40 / £70 / £100 by debt size | Business-to-business debts |
| EU: Directive 2011/7/EU | ECB reference rate + at least 8 points | At least €40 | Business and public-sector payments |
| India: MSMED Act 2006, s.16 | 3 × RBI bank rate, compounded monthly | None set | Buyers from registered micro and small enterprises |
| United States | Set by the contract, capped by state law | If agreed and lawful | Varies by state |
Reference rates change several times a year. Check the current Bank of England, ECB or RBI rate before you send a claim.
How to calculate interest on a late invoice
- 1
Enter the invoice amount
The unpaid amount, excluding any interest already charged.
- 2
Set the dates
The due date on the invoice, and the date it was paid, or today if it is still unpaid.
- 3
Choose the rule
Your contract rate, a monthly rate, or the UK, EU or India statutory rules.
- 4
Enter the reference rate
For statutory rules, enter the current base rate. The calculator adds the statutory margin.
- 5
Check the total
Interest, any fixed fee, the total to claim and the interest added per day.
- 6
Send the reminder
Open the reminder email, fill in the client and invoice details, and send it.
Get paid on time next time
Put the terms on every invoice
State the due date, the interest rate and any late fee. Clients pay attention to terms they can see.
Shorten terms and take deposits
Net 14 instead of net 30, and 50% upfront on projects, halves the money at risk.
Invoice the day work is approved
Every day between approval and invoice is a day added to how long you wait for payment.
Remind before the due date
A friendly note three days before the due date prevents most late payments.
Make paying easy
A card payment link on the invoice removes the “waiting for finance to set up the bank transfer” delay.
Pause work on overdue accounts
Write it into the agreement: work pauses when an invoice is more than 14 days late.
How do you calculate interest on a late payment?
Count the days between the due date and the payment date (or today). Multiply the invoice amount by the annual rate, then by the days late, and divide by 365. For $5,000 at 12% a year, 45 days late: 5,000 × 0.12 × 45 ÷ 365 = $73.97. Add any fixed late fee your terms or the law allow.
What is a reasonable late payment interest rate?
Whatever your contract says, within the legal limit. 1–1.5% a month (12–18% a year) is common on US invoices, though state usury laws cap it. In the UK, the statutory rate for business debts is 8% above the Bank of England base rate.
Can I charge late fees if they aren’t in my contract?
In the UK and the EU, statutory interest and fixed compensation apply to business-to-business invoices even without a written clause, unless the contract sets a substantial alternative. In the US, you generally need the client to have agreed to the terms. Put them on every proposal and invoice either way.
What is the UK statutory interest rate for late payment?
Under the Late Payment of Commercial Debts (Interest) Act 1998, it is 8% plus the Bank of England base rate as it stood on 31 December (for the first half of the year) or 30 June (for the second half). You can also claim £40, £70 or £100 fixed compensation depending on the size of the debt, plus reasonable recovery costs.
How is interest calculated under the MSMED Act?
Under Section 16 of the MSMED Act, 2006, a buyer who pays a registered micro or small enterprise late pays compound interest with monthly rests at three times the bank rate notified by the RBI, from the agreed date (which cannot be more than 45 days from acceptance).
What is the difference between simple and compound interest on an invoice?
Simple interest is charged on the original amount only. Compound interest adds each month’s interest to the balance, so later interest is charged on interest too. Most invoice terms and the UK and EU rules use simple interest; India’s MSMED Act uses monthly compounding.
Should I actually charge a client interest?
Often the main value is the reminder: an email with a clear interest figure gets paid faster than a polite nudge. Many agencies waive it once the invoice is paid, and apply it to repeat late payers. Decide case by case, but always state the terms upfront.
Is this legal advice?
No. The calculator applies the formulas described on this page. Rates change and the rules have exceptions, so check your contract and current reference rates, and take advice for large or disputed claims.
Keep running the numbers
Get a yes on the price before the work starts
Disputed invoices often start as extra work nobody agreed a price for. Creepless gets the client’s approval on a quote first, and they can pay by card. Free for two clients.
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