About this calculator
Unpaid invoices are the quiet killer of small business cash flow. A single client paying 60 days late on a $20,000 invoice can force you to fund payroll out of your own pocket, and the growth cost is often far higher than a reasonable interest rate reflects.
How it works
This calculator applies simple interest, which is what most late-payment clauses specify. If your contract specifies compounding, a different method, or a tiered penalty structure, the actual amount can differ. It is still useful for showing the scale of what is owed.
Frequently asked questions
Can I charge interest on overdue invoices?
Usually yes, if your contract says so. Some states cap the rate, and many require the terms to be in writing and accepted. Without an enforceable clause, the right to charge interest is weaker.
What interest rate is reasonable for late payment?
Many commercial contracts use 1% to 1.5% per month, which is 12% to 18% annually. This is usually considered enforceable in the US and comparable jurisdictions when set in a signed agreement.
Do I need a late fee to be enforceable?
In many places yes. A written agreement stating the rate and the trigger for interest is what makes it enforceable. Silent tolerance of late payment works against you over time.
How do I get a client to pay an overdue invoice?
A polite written reminder with the amount, the due date, and any contractual interest tends to work. Escalate in stages, keep records, and be prepared to use small claims court, which is inexpensive for small amounts.
Should I charge interest or a flat late fee?
Interest scales with how late the payment is, while a flat fee does not. Interest is more common in B2B contracts, and flat fees work better in consumer transactions where amounts are smaller.
How do late payments affect my business?
Beyond the direct cost, they create unpredictable cash flow, which makes it harder to pay suppliers and staff on time. Consistent late payment from a client is also a signal to reassess that relationship.