Accountants Late Payment Interest (Daily) Calculator
Calculate daily late payment interest, total interest accrued and the outstanding balance on an overdue invoice.
Overview
Use this daily late payment interest calculator to estimate the interest on an overdue invoice. Enter the unpaid balance, applicable annual interest rate and number of days late to see the daily charge, accrued interest and total amount due.
How it works
The calculator converts the annual interest rate into a daily rate by dividing it by 100 and then by 365. It multiplies that daily rate by the outstanding invoice balance to calculate the daily interest charge. Total interest is the daily charge multiplied by the number of days late, and the total amount due is the invoice balance plus that interest. This uses a simple-interest approach and does not add interest on previously accrued interest.
How to use this calculator
- 1Enter the outstanding invoice balance.
- 2Enter the annual late payment interest rate that applies.
- 3Enter the number of days the payment is overdue.
- 4Review the daily interest charge and total accrued interest.
- 5Check the total amount due before preparing a reminder, statement or claim.
Example Calculation
Overdue invoice amount
$5,000
Annual late payment interest rate
8%
Days payment is late
30
Daily interest charge
$1.10
For a 5,000 overdue invoice at 8% annual simple interest for 30 days, daily interest is about 1.10, total interest is about 32.88, and the total due is about 5,032.88.
Frequently asked questions
How is daily late payment interest calculated?
Daily simple interest is calculated by multiplying the overdue balance by the annual rate divided by 365. Multiply that daily amount by the number of overdue days to estimate total interest.
Does this calculator use simple or compound interest?
It uses simple interest. Interest is calculated on the original overdue invoice balance only, not on interest already accrued.
Should I use 365 or 366 days in a leap year?
This calculator uses 365 days for a consistent estimate. Your contract, local rules or internal policy may specify a different day-count method.
Does the result include fixed late payment compensation or recovery costs?
No. The result includes interest only. Any fixed compensation, debt recovery costs, administration charges or taxes should be considered separately where applicable.
What interest rate should I enter?
Use the annual rate stated in the invoice terms, contract or applicable rules. Confirm the rate and whether it is permitted before charging it.
When do late payment interest days start?
This is usually based on the day after payment becomes due, but the correct start date can depend on the contract, invoice terms and applicable rules.
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Assumptions and warnings
Assumptions
- The calculation uses simple interest rather than compound interest.
- The annual interest rate stays unchanged throughout the overdue period.
- A 365-day year is used to convert the annual rate to a daily rate.
- The overdue invoice amount is assumed not to change during the period.
- Results are estimates and exclude fixed compensation charges, collection costs, taxes and other fees.
Warnings
- This calculator provides an estimate only and is not legal, financial or tax advice.
- Late payment interest rules, contractual terms, due dates and applicable charges can vary by jurisdiction and agreement.