How late interest is worked out
Yearly rate: amount × rate × days late ÷ 365. 2,000 at 8% a year for 30 days late = 2,000 × 0.08 × 30 ÷ 365 = 13.15.
Monthly rate: amount × rate × days late ÷ 30. 1.5% a month on 2,000 for 30 days = 30.
Flat fee: a fixed amount once the invoice is late, as long as your terms say so.
Can I charge late fees?
Usually only if your terms said so before the work started; put them on every invoice. In the UK, the Late Payment of Commercial Debts Act lets businesses charge business clients interest of 8% plus the Bank of England base rate, plus a fixed sum of £40 (debts under £1,000), £70 (£1,000 to £9,999.99) or £100 (£10,000 or more). Other countries have their own rules; check them before adding fees.
A friendly reminder often works better than a fee. See our payment reminder emails.
Questions
How much late fee can I charge?
What your contract or terms allow, within the law where you work. Many businesses use 1% to 2% a month or a small flat fee.
What is UK statutory interest?
For business-to-business debts, 8% a year above the Bank of England base rate, plus fixed compensation of £40, £70 or £100 depending on the debt.
How do I add a late fee to an invoice?
Add it as a new line on the invoice, such as Late payment interest, 30 days, and send the updated invoice.
Should I always charge it?
Not always. For a good client who is a few days late, a polite reminder is often better for the relationship.