Why simple interest instead of compound interest?

Simple interest on the original invoice amount is the standard convention for invoice late fees, unlike a loan, which typically compounds.

Can I charge whatever rate I want?

Not necessarily — many US states impose usury law caps on enforceable contract interest rates, which can be lower than 18%/year.

Does this account for partial payments?

No — this assumes the full invoice amount remains unpaid for the entire overdue period.

What if my contract doesn't mention late fees?

You generally can't charge interest after the fact if it wasn't agreed to upfront — add explicit late-payment terms to future contracts and invoices.

Is 1.5%/month the same everywhere?

No — it's a commonly cited US convention. Other countries and industries may use different standard rates or statutory late-payment interest rules.

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Freelance Invoice Late-Payment Interest Calculator

Interest owed on an overdue invoice, using the common 1.5%/month convention.

🔒 Runs entirely in your browser — nothing here is ever uploaded

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Last reviewed 2026-08-30

About the Freelance Invoice Late-Payment Interest Calculator

Calculates late-payment interest owed on an overdue invoice using simple interest — the standard convention for invoice late fees — with the commonly cited 1.5%/month (18%/year) default rate used across many US freelance and small-business invoice templates.

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How to use it

Enter the invoice amount and how many days it's overdue.
Enter your annual late-payment interest rate, or use the 18%/year default.
Read the interest owed and total amount now due.

Formula

Interest = invoice amount × annual rate × (days overdue ÷ 365) — simple interest, not compounded.

Worked example

A $5,000 invoice, 45 days overdue, at the 18%/year default: $110.96 in interest, for a total of $5,110.96 due.

Interpreting your result

18%/year (1.5%/month) is a widely cited default in US invoice templates, not a legal requirement — late-payment interest is only actually owed if your contract or invoice terms explicitly state a rate. Some US states cap contract interest rates (usury laws) below what you might set here. Check your own contract language and state law before charging a client late fees. Not legal advice.

Recommendations

• State your late-payment rate explicitly in your contract or invoice terms up front — charging it after the fact, with no prior agreement, is much harder to enforce.
• 1.5%/month is a common default, but some freelancers use a flat late fee instead of (or alongside) accruing interest — check what's standard in your industry.
• Check your state's usury law limits before setting a high annual rate — some states cap enforceable contract interest well below 18%.

Frequently asked questions

No — it's a commonly used default in invoice templates, not a legal mandate. You can only actually charge late-payment interest if your contract or invoice terms specify it.