Free tool
Late fee calculator
Work out exactly what an overdue invoice is worth with interest — by monthly rate, annual rate, or flat fee, with an optional grace period.
e.g. 1.5% per month — the most common policy
Late fee owed
$37.50
Accruing $1.25 per additional day.
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How late fees on invoices are calculated
There are three common structures, and the calculator above handles all of them:
- Monthly percentage — the most common policy in the US: typically 1% to 1.5% per month (18% per year at the top end). The fee accrues daily: invoice × rate × (days overdue ÷ 30).
- Annual percentage — the same idea expressed yearly and prorated per day: invoice × rate × (days overdue ÷ 365).
- Flat fee— a fixed amount (e.g. $25) added once the invoice passes the grace period. Simple, but doesn't scale with the invoice size or how late it gets.
What's a reasonable late fee?
Most US small businesses charge 1–1.5% per month. Two rules keep you safe: the fee must be in your written payment terms before the work starts(on the contract and the invoice itself — you generally can't add fees retroactively), and it must respect your state's limits — several states cap late-fee percentages or require minimum grace periods (see our 50-state late fee law reference). We cover the practical details in our guide to late payment fees for small businesses. This calculator is for estimation — it isn't legal advice. And if you want to know how slow payment is affecting you overall, check your days sales outstanding.
The uncomfortable truth about late fees
A late fee is leverage, not revenue. Its real job is to make paying on time the path of least resistance — most businesses that add a fee policy see behavior change without ever collecting a cent of it. But a policy only works if someone actually follows up: an unenforced late fee on an unchased invoice is just a number on a PDF nobody read.
That follow-up is the part almost nobody enjoys — writing the reminder emails, escalating the tone, remembering who replied. It's also exactly what Dueflo automates for QuickBooks Online — a 6-step sequence that escalates politely until the invoice gets paid, and pauses the moment your client responds.
Common questions
Can I charge a late fee if it wasn't in my contract?
Generally no — courts and clients treat late fees as enforceable only when agreed to in advance. Add the policy to new contracts and invoices going forward.
Is 1.5% per month legal everywhere?
Not everywhere — some states cap commercial late fees lower or impose grace-period rules. Check your state before setting a rate above 1% monthly.
Does QuickBooks add late fees automatically?
QuickBooks Online has a basic built-in late fee setting, but it's US-only, applies only to invoices that become overdue after you enable it, and stops after six months. Most businesses pair a fee policy with actual follow-up instead — here's what QuickBooks' built-in reminders do and don't do.
The best late fee is the one you never have to charge
Dueflo chases every overdue QuickBooks invoice automatically — friendly at first, firmer over 45 days, paused the second your client replies.
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