Cashflow management

Late payment fee calculator for overdue invoices

March 1, 2021
Late payment fee calculator for overdue invoices

Once an invoice becomes overdue you are legally allowed to charge your B2B customers late fees, but how much should you charge? Use our late payment fee calculator to work out the daily statutory interest and the compensation you can charge on your overdue invoices.  

How to calculate late payment fees

Late payment fees are essentially interest charges on a debt. You can charge your customers late fees as soon as an invoice passes its due date. If you did not agree a due date with your customer, the invoice is considered overdue 30 days after it was issued.

In the UK, late payment fees are calculated as follows:

Total fees = daily late payment fee x days overdue + compensation fee  

Use our late fee calculator to work out the daily interest fee, compensation and total fees for your invoice:

Free late payment calculator

Due date of invoice

Total invoice value

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Daily interest charge




Total late fees to date


If you’re a Satago customer, you can add late fees to your invoice payment reminders automatically. The platform will calculate the fees for you in line with statutory limits and add them to your automated payment reminders as soon as an invoice becomes overdue.  

How to inform customers that you will be charging late fees

It’s important to let customers know in advance that you will be charging late fees on overdue invoices so as not to damage your client relationships.  

If you’re introducing a new late payment fee policy, be sure to email your existing customers to let them know when your policy will come into effect. You should also update the payment terms on your invoices and contracts to include full details of your late payment fee policy.    

When to charge late fees

If you have agreed a payment date with you customer, you can charge late fees as soon as the invoice becomes overdue. If you have not agreed a payment date with your customer, UK law states that an invoice is late 30 days after the customer receives the invoice or the goods or services have been delivered.  

How to charge late fees  

As soon as an invoice becomes overdue, you should email your customer reminding them that their payment is due. You can include the late fees within your payment reminders. Late fees will accumulate over time, so make sure you continue updating the fees each time you send a new payment reminder.  

If you are a Satago customer, the Satago platform will calculate the late fees for you and add them to your automated payment reminders on an ongoing basis.  

What do I do if my customer doesn’t pay their invoice?

Although late payments are frustratingly common, non-payment is rare. There are steps you can take to recover payment from customers who fail to respond to your payment reminders, including mediation and legal action (you can read more about this here), although this should be a last resort.

The best way to recover debts is through effective credit control and communication with your customer.  

How to improve your credit control

Credit control is the process of ensuring that your invoices are paid promptly so cash keeps moving through your business. Satago is designed to make credit control easy, by chasing your overdue invoices for you.  

Satago integrates with your accounting software and email provider and sends automated invoice reminders, monthly statements and thank you emails to your customers from your own email address. Ensuring your customers pay you on time.  

“The response from the first week of email reminders was fantastic and we brought our 90+ day debtors down by £12,500 in one week. Our debtors continue to drop thanks to the weekly email reminders sent to clients.” — Gemma Parker, Tussies Chartered Accountants

To try Satago for yourself, sign up to a two-week free trial today.