Calculate the charge on a late invoice payment.
Late payment charges usually combine a fixed fee with simple interest that accrues daily from the day after the due date. The daily rate is the annual rate divided by 365, so a 12 percent annual rate on a 4,200 invoice accrues about 1.38 a day. Showing the daily accrual alongside the total is what makes a chaser letter effective: it tells the payer exactly what further delay costs them.
Simple daily interest plus fixed fee
Daily interest = invoice x annual rate / (100 x 365); interest = daily interest x days overdue; total charge = interest + fixed fee
Indicative calculation only. Entitlement to late payment interest and fees is governed by your contract and by local statute, and differs between commercial and consumer debts. Take legal advice before pursuing a claim.
It depends on the contract and the jurisdiction. Many countries set a statutory rate for late commercial payment — often a central bank reference rate plus a margin of around 8 percentage points — which applies when the contract is silent.
In several jurisdictions a fixed compensation amount is statutory for late commercial debts, scaled to the size of the invoice. Where it is not statutory it must be in the agreed terms to be enforceable.
Usually not. Statutory and most contractual late payment interest is simple, calculated on the principal only. Compounding generally requires an explicit contractual term and may be unenforceable in consumer contexts.