Business & Sales

What Is Late Payment Interest?

Late payment interest is interest charged on an overdue amount for the period it remains unpaid. It is common on business invoices, where the rate may be set by contract or, in some countries, by law (statutory interest). It is usually calculated as simple interest on a daily basis.

Formula

Interest = overdue amount × annual rate × days late ÷ 365. 5,000 overdue for 45 days at 8% a year accrues about 49.32.

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⏳ Late Payment Interest Calculator See exactly how much late fee to charge an overdue invoice. Calculate → 💹 Simple Interest Calculator Interest and total amount for any principal, rate, and time — any currency. Calculate →

🔗 Related Terms

Late Fee Simple Interest Invoice Net 30 Payment Terms

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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.