Late Payment Interest Calculator

Calculate statutory or contractual interest on a past-due commercial invoice. Built-in jurisdictions include the UK Late Payment Act, the EU Late Payment Directive, the Indian MSMED Act, and a contractual-rate fallback for countries without a statutory B2B rate.

Use it to chase a slow-paying client, draft a recovery letter, calculate prejudgment interest, or pressure-test a contract's interest clause before you sign. Pair with the invoice due date calculator to confirm exactly when payment was due.

Invoice Due Date Calculator →Net 30 Calculator →Net 60 Calculator →DSO Guide →

How statutory rates work in different countries

The table below summarizes the legal frameworks built into the calculator. Statutory means the rate is set by law and applies even if the contract is silent. Contractual means the parties' agreement controls; if there is no clause, the default falls back to a court-set rate or the civil-code interest figure.

Jurisdiction	Mode	Reference
United Kingdom	Statutory	Late Payment of Commercial Debts (Interest) Act 1998
EU (France, Germany, Italy, Spain, etc.)	Statutory	EU Late Payment Directive 2011/7/EU
United States	Contractual	No federal statutory B2B rate; FAR 32.905 governs federal procurement only
Canada	Contractual	Interest Act (federal); province-by-province for prejudgment interest
Australia	Contractual	Late Payments to Small Business policy; state retail/lease laws vary
India	Statutory	MSMED Act 2006, Section 16
Philippines	Contractual	Civil Code Art 2209; BSP Circular 799 (2013) sets legal interest at 6%
Germany	Statutory	BGB §288 (2); EU Directive 2011/7/EU
France	Statutory	Loi LME 2008-776; Code de commerce art L441-10
Japan	Contractual	Civil Code Art 419; Subcontract Act for SME protection
Singapore	Contractual	Civil Law Act; Supreme Court Practice Direction 99(2) sets prejudgment at 5.33%
Mexico	Contractual	Código de Comercio art 362; legal default 6% if contract silent

Worked example: UK B2B invoice paid 47 days late

A consultancy in Manchester invoices a corporate client for £5,000 with Net 30 terms, dated April 1, 2026 with a due date of May 1, 2026. The client pays on June 17, 2026, which is 47 days late. The Bank of England base rate at the time is 4.75 percent. Statutory rate = 4.75 + 8 = 12.75 percent. Interest = 5000 × 0.1275 × (47 / 365) = £82.07. The fixed compensation fee for an invoice in the £1,000 to £10,000 band is £70. Total recoverable: 5000 + 82.07 + 70 = £5,152.07. The supplier can include this figure on a follow-up demand letter without going to court.

Simple versus compound interest

The calculator uses simple interest because that is what most jurisdictions use in practice. UK, EU, and US prejudgment interest are simple. The two main exceptions are India's MSMED Act (monthly compounding at three times the RBI bank rate) and a handful of US states that compound annually for prejudgment interest. The difference is small over short delays but grows quickly past 12 months: a £10,000 invoice at 12.75 percent simple is £1,275 of interest after a year, while monthly compounding at the same rate would be £1,353.

Reading contract interest clauses

Common clauses you will see in B2B contracts: "interest at 1.5% per month" (= 18 percent annual simple), "the lesser of 18% per annum and the maximum permitted by law" (covers usury caps), "ECB reference rate plus 8 percent" (mirrors the EU directive even outside the EU), and "LIBOR + 4%" (legacy, since LIBOR was discontinued in 2023; courts now substitute SOFR for USD or SONIA for GBP). When the clause is ambiguous, courts default to the lower interpretation. Enter the annualized rate into the calculator regardless of how the clause is phrased; the math is the same.

For informational purposes only

This calculator provides general estimates based on business day counting rules. It does not constitute legal advice. Deadlines in legal, regulatory, or contractual matters may be subject to jurisdiction-specific rules, court orders, or statutory exceptions. Always verify critical deadlines with a qualified professional.

Frequently Asked Questions

How does the UK Late Payment Act work?

The Late Payment of Commercial Debts (Interest) Act 1998 entitles a B2B supplier to claim interest at the Bank of England base rate plus 8 percent on any invoice that is more than 30 days overdue (or the contracted term, whichever is later). Suppliers can also claim a fixed compensation fee per overdue invoice: £40 for invoices up to £1,000, £70 up to £10,000, and £100 above that. The right exists by default; the supplier does not need to mention it in the contract.

How does the EU Late Payment Directive work?

Directive 2011/7/EU sets a minimum statutory rate of the European Central Bank reference rate plus 8 percentage points across all 27 member states. Each country implements it slightly differently: Germany adds 9 points (BGB §288), France allows higher contractual rates plus a €40 fixed fee, and Italy applies the rate automatically without the supplier having to send a reminder. Public authorities must pay within 30 days; private B2B contracts can extend to 60 days only with explicit agreement.

Why is there no US statutory rate?

The United States has no general federal late-payment statute for B2B transactions. The Prompt Payment Act (FAR 32.905) covers federal procurement only. State law fills the gap: most states allow prejudgment interest of 6 to 18 percent annually if the contract is silent. New York is 9 percent, California is 10 percent, Texas defers to the contract. For commercial work, the contract's interest clause governs; without one, you fall back to the state default at the time of judgment.

Does the calculator use simple or compound interest?

Simple interest by default. Most jurisdictions, including the UK and the EU directive, use simple interest on the principal amount. India's MSMED Act is the main exception: it requires monthly compounding at three times the RBI bank rate, which materially changes the answer over long delays. If your contract specifies compounding (rare in B2B), the actual recovery will exceed the simple-interest figure shown here.

How do I read a contract clause that says interest of 1.5 percent per month?

Multiply by 12 to get the annual rate: 1.5 percent per month is 18 percent per year. Enter 18 as the contractual annual rate. Some clauses say per month and mean compound monthly, in which case the effective annual rate is (1.015)^12 minus 1, or about 19.56 percent. Read the clause carefully; the wording per annum or annualized signals simple interest, while the wording compounded monthly is unambiguous.