Invoice Late Fee Calculator
Enter the unpaid amount, the due date and the late-fee terms from your signed agreement. The calculator returns days overdue, periods, the fee and the total now due — it does the arithmetic; your state and your contract decide what you may charge.
- Monthly %, annual % or a flat fee per period
- Grace days, prorating and compounding
- Late-fee rules vary by state — read the notes
Formula — how the numbers are calculated
- Days overdue
days overdue = as-of date − due date- Calendar days after the due date. Not yet due shows zero.
- Chargeable days
chargeable = max(0, days overdue − grace days)- Days inside the grace period are not charged.
- Periods
periods = chargeable ÷ 30 (rounded up when each started month counts)- "Per month or fraction of a month" means a started month counts in full; prorating uses the fraction.
- Annual rate to monthly
monthly rate = annual rate ÷ 12- 18% per year is 1.5% per month.
- Simple fee
fee = balance × rate × periods- $2,500 × 1.5% × 2 = $75.00.
- Compounding fee
fee = balance × ((1 + rate) ^ periods − 1)- Each period's fee joins the balance. $2,500 × (1.015² − 1) = $75.56.
- Flat fee
fee = flat amount × periods- Compounding does not apply to a flat fee.
- Total now due
total = balance + fee- What to put on the reminder.
How to calculate a late fee on an invoice
- Find the late-fee clause
It has to be in the signed contract or in invoice terms the customer accepted before the work. If there is no clause, stop — a fee that first appears after the due date is hard to enforce and tends to start a fight instead of a payment.
- Enter the unpaid balance
The amount still owed, not the original invoice total if part has been paid. Late fees apply to what is outstanding.
- Enter the due date and the date you are calculating to
The due date is the one printed on the invoice. The second date is today, or the day the customer paid.
- Choose the fee type and rate exactly as written
"1.5% per month" is a monthly percentage. "18% per annum" is an annual percentage. "$25 per month" is a flat fee per period. Use the words in your clause.
- Enter grace days, if your terms give any
Some clauses start the fee at the due date, others after a grace period. Days inside the grace period are not charged.
- Set how periods are counted, and whether the fee compounds
"Per month or fraction of a month" means every started month counts. Prorating charges by the day. Simple interest is the default; charging a fee on top of earlier fees needs explicit wording and may be restricted where you are.
- Put the calculation on the reminder
Send the customer the fee, the total, and how you got there. A visible calculation gets paid; a surprise number gets argued.
What to include in a late-fee clause
How do you calculate a late fee on an invoice?
Multiply the unpaid balance by the rate, then by the number of periods the invoice has been overdue. For a percentage fee: fee = balance × rate × periods. For a flat fee: fee = flat amount × periods. The total now due is the balance plus the fee.
Worked example. A $2,500 invoice was due July 21, 2026 and it is now September 4, 2026 — 45 days overdue. The contract says 1.5% per month or fraction of a month, no grace period. Two months have started (days 1–30 and days 31–45), so periods = 2. Fee = $2,500 × 0.015 × 2 = $75.00. Total now due = $2,575.00.
Same invoice, prorated by the day instead: 45 ÷ 30 = 1.5 periods. Fee = $2,500 × 0.015 × 1.5 = $56.25, total $2,556.25. Same invoice at 18% per year: 18% ÷ 12 = 1.5% per month, so the arithmetic is identical to the first case. Which of these is right depends on the words in your clause, which is why the calculator asks how periods are counted rather than guessing.
What is a typical late fee for a contractor invoice?
A monthly percentage in the low single digits, most commonly quoted as 1% to 1.5% per month (12% to 18% a year), or a flat fee per period on small invoices. That is a description of common practice, not a legal ceiling: Joist, an invoicing vendor, puts it as "most contractors charge between 1% and 1.5% interest per month" in its guide to late fees, and the same range shows up in most small-business advice. Your ceiling is set by your state, and it may be lower.
For a sense of what legislatures consider reasonable in construction specifically, several states' prompt-payment laws set a statutory rate for late progress payments on construction contracts. Verified at the source on September 4, 2026:
Those are narrow statutes — commercial construction payment chains, not a homeowner's kitchen invoice — but they show that 1% to 2% a month is the band lawmakers have written down for late construction money. By comparison, the federal government pays interest on its own late invoices under the Prompt Payment Act at a rate Treasury resets twice a year; it is 4.75% per year for July–December 2026 (fiscal.treasury.gov). Contractor clauses run well above that because the fee is meant to change behavior, not to compensate for the time value of money.
What we do not list here is a table of state caps for consumer invoices, because those caps depend on the type of contract, the type of customer and how your state's courts treat late charges versus interest, and a wrong number on a page like this would be worse than none. Find your state's rule, or ask an attorney who does construction work in your state, before you set the rate.
Does the late fee have to be in the contract?
In practice, yes. A late fee is a term of the deal, and a term the customer never agreed to is a term you will struggle to collect. Put it in the signed estimate or contract, repeat it on every invoice, and mention it in the reminder before the due date. Our post on net 30 vs due on receipt covers the four things that belong on every invoice, and the late-fee clause is one of them precisely because it has to be disclosed before the work.
The fee also needs a due date to hang on. "Net 30" on its own invites the argument about when the 30 days started; "Due August 21, 2026" does not. The free invoice generator on this site prints a specific due date and has a late-fee line for exactly this reason.
If the customer has already gone quiet and the fee is the least of it, the escalation ladder in what to do when a customer refuses to pay — reminders, a demand letter, lien rights where you have them, small claims — matters more than the arithmetic here.
Simple or compounding — which should you use?
Simple, unless your clause clearly says otherwise. With simple interest the fee for each period is a percentage of the unpaid balance; with compounding, each period's fee is added to the balance before the next period's percentage is taken. On short overdue windows the difference is small; on long ones it grows.
Six months on a $5,000 balance at 1.5% per month: simple = $5,000 × 0.015 × 6 = $450.00. Compounding monthly = $5,000 × (1.015⁶ − 1) = $5,000 × 0.09344 = $467.22. Two months on the $2,500 example: simple $75.00, compounding $75.56. The toggle in the calculator switches between the two so you can see both before you decide what the clause should say.
Grace days, partial payments and disputed invoices
Grace days are days after the due date on which no fee accrues. If the clause gives ten days, the calculator subtracts them before counting periods: an invoice 91 days overdue with 10 grace days has 81 chargeable days, which is three started months at $25 flat = $75.00.
Partial payments reduce the balance the fee is charged on. If the customer paid half on day 20, the cleanest approach is to calculate the fee on the full balance for the days before the payment and on the remaining balance after it — run the calculator twice and add the results. Apply payments to the oldest balance first unless your terms say otherwise.
Disputed invoices are a judgment call. Charging a fee on an amount the customer has a genuine question about tends to harden the dispute; charging it on the undisputed part while you resolve the rest keeps the pressure on without looking punitive. Whatever you decide, decide it the same way every time — a fee you waive for one customer and enforce for another is the kind of thing that ends up in a review.
Late fees are a deterrent, not a revenue line
The fee's job is to make your invoice the one that gets paid first. If you are collecting a lot of late fees, the terms are working against you, not for you — the goal is a customer who pays on day 28 because they know day 31 costs money, not one who pays on day 60 plus 3%. The things that actually move the pay date are a specific due date, a reminder a few days before it, a friendly text the day after, and a payment link the customer can use from their phone.
Full disclosure: TrustPro is our product. It sends invoices by text or email with a card or bank-transfer link, runs the reminders automatically, and shows you who is overdue. Payments cost 3.1% (4.1% for instant payout), and plans start at $29/mo with a 14-day free trial and no credit card — see how contractors get paid faster with TrustPro. The calculator on this page is free regardless.
And take the deposit. A late fee is the tool for the last 30% of the job; the deposit is what keeps the first 70% from ever becoming a collection problem.
FAQ
How do you calculate a 1.5% monthly late fee?
Multiply the unpaid balance by 0.015 for each month (or started month, if your clause says "or fraction of a month") the invoice is overdue. A $2,500 invoice two months overdue at 1.5% per month carries a $75.00 fee, for a total of $2,575.00.
What is 1.5% per month as an annual rate?
18% per year as simple interest (1.5% × 12). If the fee compounds monthly, the effective annual rate is slightly higher, about 19.6%, because each month's fee is charged on the previous month's fee as well as the balance.
Can I charge a late fee if it is not in my contract?
Not reliably. A late fee is a term the customer has to have agreed to before the work — in the signed contract or accepted estimate — and courts generally do not let a business add one after the due date. Put the clause in your contract and repeat it on the invoice.
How many days after the due date can I start charging?
Whatever your clause says: from the due date itself, or after a stated grace period. If your terms give ten grace days, the fee starts on day eleven. The due date printed on the invoice is day zero, so print a specific date rather than "net 30."
Is there a maximum late fee I can charge?
Often, and it varies by state and by whether the customer is a consumer or a business. Some states cap the rate, some require specific disclosure, and some treat late charges differently from interest. This page does not list state caps because a wrong one would do harm; check your state's rules or a local construction attorney before setting the rate.
Should late fees compound?
Usually not. Most contractor clauses are simple interest — a percentage of the unpaid balance each period. Compounding needs explicit wording and may be restricted in your state, and on a typical overdue window the difference is small: $450 simple versus $467.22 compounded on $5,000 over six months at 1.5%.
Do I charge the late fee on the total invoice or the unpaid balance?
On the unpaid balance. If the customer has paid part of the invoice, the fee applies only to what is still owed. Apply payments to the oldest balance first unless your terms say otherwise.
Should I use a flat fee or a percentage?
Percentages scale with the invoice; flat fees keep the clause meaningful on small ones, where 1.5% of $300 is $4.50. Many contractors use a flat fee per period on small invoices or "the greater of $25 or 1.5% per month." Either way, write the exact words in the contract.
What if the customer pays the invoice but refuses the late fee?
Decide whether the fee is worth the relationship and the time. Often the right call is to accept the payment, note the fee was waived once, and enforce it next time — the fee's job was to get the invoice paid, and it did. If the customer is a repeat late payer, the answer is a deposit and tighter terms, not a bigger fee.
Do late fees apply to an unpaid deposit?
Rarely worth it. An unpaid deposit means the work has not started, so the right response is not to start rather than to charge a fee. Late fees belong on the final invoice, after the work is done and the customer has the benefit of it.
- N.Y. General Business Law § 756-b — interest on late construction payments (nysenate.gov)
- Texas Property Code § 28.004 — interest on overdue payment (Prompt Payment to Contractors and Subcontractors Act)
- California Business and Professions Code § 7108.5 — progress payments to subcontractors
- U.S. Treasury, Bureau of the Fiscal Service — Prompt Payment interest rate (July–December 2026)
- Joist — Can contractors charge late fees or interest on invoices? (vendor guide, cited for common practice only)
More free contractor tools
Keep reading
- Net 30 vs due on receipt: which terms get you paid?The terms that belong on every invoice, including how to disclose a late fee properly.
- What to do when a customer refuses to payThe escalation ladder from reminder to demand letter to small claims, with state limits.
- Free contractor invoice generatorPrints a specific due date and a late-fee line — real PDF, no signup.
- Contractor deposit guideThe deposit is the tool that keeps most invoices from ever going overdue.
- How contractors get paid faster with TrustProText-to-pay invoices, automatic reminders and card or ACH online.
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