TOOLS / FOR SELLERS

What the overdue invoice actually owes

A late fee written into your terms is a boundary, not a punishment. Here's the exact number, prorated to the day the client is late.

$
The unpaid balance, before any fee.
Calendar days past the due date on your terms.
%
The rate stated in your contract. 1–1.5% per month is common — check your state's legal cap.
TOTAL NOW OWED$—
LATE FEE$—
ADDS PER DAY$—

How this is calculated

The fee is prorated from your monthly rate across the days the invoice is late:amount × (monthly rate% ÷ 30) × days late. The total owed is the invoice plus that fee, and the per-day figure is what keeps accruing until it's paid. This is simple interest — it doesn't compound the fee on itself — which is the fairer and more common approach for service invoices.

A late fee only holds up if it's written into the agreement the client accepted before work started, and some states cap the rate you can charge — confirm yours before you send anything. See thelate fee entry for how to word it, andpayment terms for setting the due date the clock starts from.