Finance Tools
Enter the unpaid amount, the date it was due and an annual rate to get the interest owed, what it is rising by each day, and the total now due — with the statutory fixed compensation added if it applies.
Overview
Enter the amount still unpaid, the date it fell due and an annual rate, and this works out the interest that has accrued, what the debt is rising by each day, and the total now owed. Where statutory fixed compensation applies, it adds that too.
The arithmetic is a single multiplication. What makes it worth a tool is everything around it: interest runs from the day after the due date rather than the due date itself, statutory interest is simple rather than compounded, the fixed compensation is claimed once per invoice rather than per day, and a rate copied from a blog post two years out of date is worse than no rate at all.
That last point is why nothing is filled in for you. Statutory interest is defined as a central bank's reference rate plus a fixed margin, and the reference half moves whenever the bank decides it should. A figure printed here would be correct for a few months and quietly wrong afterwards — and this number goes into a letter demanding money, where being confidently wrong is expensive.
The calculation happens in your browser. An overdue invoice identifies a client who has not paid, and that is not something worth uploading in order to perform a multiplication.
Step by step
Type the amount still outstanding, the date payment fell due, and the date it was paid — or leave today's date if it is still unpaid.
Use the rate your contract sets. If it does not set one, look up the current central bank reference rate and add the statutory margin for your jurisdiction.
UK and EU commercial debts carry a fixed sum on top of the interest. Choose the regime that applies, or leave it as none.
The interest, the daily accrual and the total now due are shown together, with anything worth checking flagged. Copy the figures to put them in an email.
Background
Late payment interest is compensation for being out of pocket. Money that should have been in your account in March and arrived in September was, for six months, funding somebody else's business rather than yours — and interest puts a price on that. It is not a penalty, which matters legally: a charge set far above the commercial cost of the delay can be challenged as a penalty and struck out, while interest at a defensible rate is simply the cost of the credit the client took without asking.
Most jurisdictions provide a statutory rate for commercial debts so that a supplier who never thought to write an interest clause is not left with nothing. In the UK that is the Late Payment of Commercial Debts (Interest) Act 1998, which sets interest at the Bank of England base rate plus eight percentage points. The EU's Directive 2011/7/EU works the same way, at the European Central Bank reference rate plus at least eight. Both also provide a fixed sum on top, to cover the cost of chasing.
A contract term overrides the statutory position, which cuts both ways. A clause setting a substantial rate is worth having, because it is easier to point at than a statute. A clause setting a low one, or a payment term long enough to be grossly unfair, can leave you worse off than the default would have — and in the UK and EU a term that is grossly unfair to the supplier can be set aside, which is a reason to read what you signed rather than to assume the worst.
The distinction between a commercial and a consumer debt runs through all of it. The statutory schemes above cover business-to-business debts. Money owed by a private individual is governed by different rules, usually with lower ceilings and stricter formalities, and the fixed compensation sums do not apply at all. A calculator cannot tell which kind of debt it has been given, so it is worth being clear about it yourself before quoting a figure at anyone.
There is also a practical question that the arithmetic cannot answer: whether to charge it. Interest is often more useful as a term the client knows exists than as a sum actually claimed, and waiving it explicitly — saying you have calculated it and are not pursuing it this time — is a stronger position than never mentioning it. Knowing the number is what makes that a choice rather than an omission.
Reference
Six inputs, and every one of them is a decision rather than a formality. The two most often got wrong are the date the clock starts and the number of days in the year, and both change the answer by enough to be argued with.
The amount still unpaid
The outstanding balance, not the original invoice total. A part payment reduces the principal from the day it lands, so a partly paid invoice needs the calculation split at that date.
Required
The date payment fell due
The date on the invoice, or the date your terms produce. Interest runs from the day after it, so an invoice paid on its due date is not late and charging a day for it invites an argument you will lose.
Required
The date paid, or today
The end of the period. For a debt still outstanding, use today and expect the figure to keep climbing — which is what the daily accrual line is for.
Required
The annual rate
Your contractual rate if you have one, otherwise the statutory reference rate plus the margin your jurisdiction sets. It is entered rather than assumed, because the reference half moves.
Required
The day count basis
365 unless the contract says otherwise. A 360-day year spreads the same annual rate over fewer days, making each day slightly more expensive — a convention from finance contracts rather than from commercial supply.
Required
The compensation regime
Which statutory scheme applies, if any. The fixed sum is added once, only when the debt is actually late, and only means anything on a business-to-business debt.
Optional
What is not an input
Your frustration, the number of times you have chased, and how badly the client behaved. None of it changes the figure, and building it into the number is how a claim stops being enforceable.
Optional
Who it helps
The people for whom a late invoice is a cash-flow event rather than an accounting one. Knowing the number turns a vague grievance into a specific figure, which is a much easier thing to raise.
Where payment terms are set by the buyer and stretched at will. The statutory scheme exists precisely for this imbalance, and it applies whether or not anything was written down.
Project work invoiced in milestones means several dates in flight at once. Calculating each one separately is the only way to know the real exposure rather than a rough sense of it.
Asked, regularly, what a client can add to an overdue invoice. Having the figure and the reasoning together makes that a two-minute answer rather than a research task.
Seeing what a rate produces over ninety days is the fastest way to judge whether a proposed clause has any teeth. Most do not, and it shows immediately.
Interest and compensation change what a claim is worth. So does how old it is — a debt past the limitation period may not be recoverable at all, however clear the arithmetic.
Do it properly
A clause you can point to is easier to enforce than a statute you have to explain. Set it at or a little above the statutory level, and make sure the client saw it before the work started.
The due date itself is a day the client is entitled to. Charging for it is a small error that hands over an easy objection and makes everything else in your figure look approximate.
A specific number is a position. 'I will have to start charging interest' is a threat with nothing behind it, and clients who are managing their payables can tell the difference immediately.
Interest you calculate and then decline to charge is a concession the client can see. Interest you never mention is simply money you did not ask for, and it sets the expectation for next time.
Interest accrues on what is outstanding, so a payment on account reduces the principal from that date. Running the whole period at the original amount overstates the figure and undermines the rest of it.
The figure is a fact; how you raise it is a relationship decision. Sending a demand generated from a template is how a recoverable invoice becomes a lost client and an unrecovered invoice.
Limitation periods end claims regardless of merit — six years for a simple contract debt across much of the common-law world, shorter in some jurisdictions. Check the age before spending money on it.
Avoid these
Charging interest from the invoice date
Run it from the day after payment fell due. An invoice issued on net 30 terms is not late until day 31, and starting a month early is the kind of error that gets the whole figure disputed.
Using a rate found on a website
Look up the current reference rate yourself and add the margin. Statutory rates move with the central bank, and a figure that was correct when an article was written is simply wrong now.
Compounding without a contract term
Apply simple interest unless your terms expressly allow compounding. Statutory interest is simple, and a compounded figure is both larger and easier to challenge.
Adding the fixed compensation more than once
It is a single sum per unpaid invoice, not per month and not per chase. Claiming it repeatedly turns a straightforward entitlement into an argument about your credibility.
Claiming statutory compensation on a consumer debt
The UK and EU fixed sums apply to commercial debts between businesses. Money owed by a private individual falls under different rules, and quoting the wrong regime undermines the rest of the claim.
Setting a punitive rate to make a point
Keep it defensible. A rate set far above the commercial cost of the delay reads as a penalty rather than as interest, and a penalty is not enforceable — so the high rate wins nothing and costs the claim.
Calculating interest and never raising it
Decide, and say what you decided. An interest entitlement that is never mentioned teaches the client that your payment terms are advisory, which costs more over a year than the interest would have.
FAQ
The Late Payment Interest Calculator is at the top of this page — free, no signup, nothing uploaded.
Guides
Articles that go deeper than this page has room for.