Late Fee Calculator
A late fee is a charge added to an invoice that was not paid on time, usually a percentage of the outstanding balance per month. Receipt Caker's free late fee calculator takes the overdue balance, your monthly fee rate and the number of months late, then shows the fee and the new amount due.
- How do I calculate a late fee on an invoice?
- Receipt Caker calculates a late fee by multiplying the overdue balance by your monthly fee rate and the months overdue: fee = balance × (rate ÷ 100) × months. Enter the three figures above and it shows the fee and the total now due instantly.
- Late fee
- 7.50
- Amount now due
- 507.50
How a late fee is calculated
A late fee on an overdue invoice is usually a percentage of the outstanding balance charged per month: fee = balance × (rate ÷ 100) × months. On a $2,000 balance at 1.5% per month, two months late, the fee is 2000 × 0.015 × 2 = $60, so the new amount due is $2,060. Receipt Caker's late fee calculator returns the fee and the updated total the instant you enter the three figures.
This models a simple monthly charge rather than compounding interest, which keeps it transparent and easy for a client to verify. If your terms compound, apply the calculator month by month, feeding each new balance back in.
Flat fee versus percentage
Late fees come in two shapes: a flat amount, such as $25 per overdue invoice, or a percentage of the balance per month like the one above. Flat fees are simple and often make sense for small invoices, where a percentage would be trivial. Percentage fees scale with the amount owed and better reflect the cost of being kept out of your money on a large balance.
Some businesses combine the two — a flat minimum with a percentage above a threshold. Whichever you use, this calculator handles the percentage case; for a flat fee you simply add the fixed amount to the balance. State your chosen method on the original invoice so it is never a surprise.
Setting a fair and lawful fee
A common late fee is 1% to 2% of the overdue balance per month, roughly 12% to 24% a year, but the maximum you can legally charge is capped in many places, so check your local rules before setting a rate. The fee and your payment terms should appear on the original invoice, before it ever becomes overdue, so the customer agreed to them up front.
Charging more than the law allows can make the fee unenforceable, so err toward a reasonable, clearly stated rate. This calculator lets you model any monthly percentage, so you can see the resulting charge at a few rates and pick one that is both fair and within your jurisdiction's limits.
Adding the fee to your records
Receipt Caker calculates the fee but does not track which invoices are unpaid, send reminders, or apply charges automatically — it is a document generator, not an accounts-receivable system. Chasing overdue invoices happens through your own email or accounting process; this tool just gives you the number.
Once you know the fee, open the Receipt Caker generator and add it as a separate line against the original invoice number and due date, so the customer sees the original balance and the added charge clearly. The tool recalculates the subtotal and total, and keeping the fee on its own line makes it transparent and easy to reconcile later.