VegaPal

Free tool

Late payment fee calculator

Enter the overdue amount, your rate and how late the payment is, and see what the charge would come to. Whether you should apply it is a separate question from what it adds up to, and the number is usually smaller than people expect.

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Use the rate stated in your invoice terms.

Rate basis
How late is it?
days
Days overdue30
Late-payment charge75.00
Charge as % of the overdue amount1.50%
Total including charge5,075.00

Simple interest on the overdue amount. A monthly rate is treated as 30 days for the daily conversion; if your terms specify compounding, this figure is conservative.

This is arithmetic, not legal advice. Whether a late-payment charge is enforceable, and at what maximum rate, depends on your jurisdiction and on what your contract or invoice terms said before the invoice fell due.

Daily and monthly rates are not interchangeable

A 1.5% monthly rate and a 0.05% daily rate look similar and are not. Over 90 days the monthly figure gives roughly 4.5% simple, the daily figure gives 4.5% too — but 1.5% per month compounded, or 0.05% per day over a 31-day month, drift apart quickly once you are into multiple periods.

This calculator uses simple interest on the overdue principal, which is the most common and most defensible basis. If your terms specify compounding, the figure here will be conservative.

When to actually charge it

The charge has to have been stated in your terms before the invoice fell due. Introducing it afterwards is a negotiating position, not a term, and clients treat it accordingly.

It is also worth asking what you want: the charge, or the payment. On a client relationship you intend to keep, waiving the fee while pointing out that it existed often collects faster than applying it. On a client who has stopped answering, the fee is the least of your problems.

State the term before you need it

Put your late-payment wording in the terms field on every document, so it is on the record before an invoice falls due.

Frequently asked questions

How is a late payment fee calculated?

Most commonly as simple interest on the overdue amount for the days it is late. This tool converts a daily or monthly rate into the charge for the period you enter.

Can I add a late fee that was not on the invoice?

In practice, not effectively. A term needs to be stated before the invoice falls due if you want to rely on it. Take advice on your jurisdiction.

Does VegaPal add late fees automatically?

No. There is no automatic interest calculation or dunning. You can state the term in the terms field and add a charge as a line item on a new document if you decide to apply it.

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