Calculate the interest you can charge on overdue invoices under late payment law.
Invoicing, Tax & Tools
Bill clients, track time, and file taxes — software built for the self-employed
Late payments are one of the most common frustrations in freelancing. Beyond the cash flow stress, every day a payment is delayed costs you money in real terms — money you could have invested, used to pay bills, or deposited in a savings account.
Late payment interest gives you a mechanism to make clients whole for this cost. In the UK, the Late Payment of Commercial Debts Act automatically grants B2B sellers the right to charge statutory interest (currently 8% above the Bank of England base rate) on overdue invoices. In the US, your contract must specify the rate.
The practical value of late payment interest isn't usually in the amount collected — it's in the behavior change it creates. Clients who know you'll charge interest tend to pay faster. The policy pays for itself in improved cash flow.
Prevention is still better than cure: require deposits on new clients, include clear payment terms on every invoice, and send automated payment reminders. Reserve late payment interest for clients who repeatedly pay late despite reminders.
Late Payment Interest
Interest charged on overdue invoices, calculated as an annual percentage of the outstanding amount applied to the number of days past the due date.
Invoice
A formal document sent to a client requesting payment for goods or services rendered, detailing the amounts, descriptions, and payment terms.
Client Profitability
A measure of how much profit a specific client relationship generates after accounting for all time spent — billable and non-billable — on that client.
Yes, if stated in your contract or terms. In the UK, the Late Payment of Commercial Debts Act gives you the right to charge statutory interest (8% above BoE base rate) on overdue B2B invoices automatically. In the US, your contract must specify the rate — 1.5%/month (18% APY) is common.
Stating your late payment policy clearly upfront rarely damages relationships — it sets professional expectations. Actually charging interest on a habitually late-paying client sends a clear message. If a client is consistently 60+ days late, the relationship is already damaged — you're just not being paid for it.
Include it in your contract and on every invoice: 'Invoices unpaid after [X] days are subject to a late payment fee of [rate]% per month on the outstanding balance.' Send a polite reminder at 7, 14, and 30 days past due. Add the interest when issuing a follow-up invoice.
Under the UK Late Payment Act, you can also claim a fixed compensation amount: £40 for debts under £1,000, £70 for £1,000-£9,999, and £100 for £10,000+. This compensates for administrative costs of chasing payment.
Invoice Calculator
Calculate the total amount to put on your freelance invoice including VAT, discounts, and deposits already paid.
Client Profitability Calculator
Calculate the true profitability of a client relationship accounting for all hours spent — billable and non-billable.
Project Quote Calculator
Build an accurate freelance project quote accounting for estimated hours, complexity buffers, revision rounds, and expenses.