Late Payment Interest Clause Calculator

How to use it

Enter the invoice, days past due, any grace period and the annual interest rate in your clause. Add a fixed late fee if your terms or local law allow one, and your own cost of carrying receivables. The result shows the interest, the total due, your cost of waiting and the net compensation. The chart shows how the two lines diverge as an invoice ages, which helps when deciding when to escalate collection.

• Convert monthly rates to an annual figure before entering them.
• Count days from the due date, not the invoice date.
• Use a realistic carrying cost that includes overdraft or factoring fees.

Reading the result

If the clause rate is lower than your carrying cost, late paying customers are effectively borrowing from you at a discount. Raising the rate is one fix, but stricter credit holds, early payment discounts and tighter dunning cycles often work better. Many customers dispute small interest charges, so some businesses use the clause as leverage in negotiations rather than invoicing it on every late payment.