Late Payment Interest Calculator

Last reviewed: October 14, 2026

Calculate statutory or contractual interest on a past-due commercial invoice. Built-in rules cover the UK Late Payment Act, the minimum rate of the EU Late Payment Directive, Germany's § 288 BGB, the French Code de commerce rate and the Indian MSMED Act. For the other countries in the list the calculator holds no statutory rate and applies the rate you enter.

Use it to chase a slow-paying client, draft a recovery letter, 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 amount ($)

Jurisdiction

Due date

Payment received (leave blank if unpaid)

Contractual annual rate (%)

No statutory rate is built in for the United States. FAR subpart 32.9 covers invoice payments on federal government contracts, not payments between private businesses. Enter the rate your contract states.

Total amount due

$5,032.88

Principal

$5,000.00

Interest

$32.88

Days late

Effective rate: 8.00% per year

Calculation: $5,000.00 × 8.00% × (30 / 365) = $32.88

Reference: No United States statutory rate built in; FAR subpart 32.9 (prompt payment) covers invoice payments on federal government contracts. Verify current rate

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

How statutory rates work in different countries

The table below lists the frameworks built into the calculator. Statutory means the law sets the rate, and it applies even where the contract says nothing. Contractual means the calculator holds no statutory business-to-business rate for that country and uses the rate you enter: the one in the contract or, where the contract is silent, the rate the applicable law provides.

Jurisdiction	Mode	Reference
United Kingdom	Statutory	Late Payment of Commercial Debts (Interest) Act 1998, ss 4 and 5A; Rate of Interest (No. 3) Order 2002, art. 4
EU (Directive 2011/7/EU minimum)	Statutory	Late Payment Directive 2011/7/EU, arts 2(6)-(7) and 3(2): ECB main refinancing rate on 1 January or 1 July plus at least 8 points
United States	Contractual	No United States statutory rate built in; FAR subpart 32.9 (prompt payment) covers invoice payments on federal government contracts
Canada	Contractual	Interest Act (R.S.C. 1985, c. I-15), ss 3 and 4
Australia	Contractual	No statutory B2B late-payment rate built in; the contract's rate applies
India	Statutory	MSMED Act 2006, ss 15 and 16: three times the bank rate notified by the Reserve Bank of India, compounded with monthly rests
Philippines	Contractual	Civil Code arts 1956 and 2209; Bangko Sentral ng Pilipinas Circular No. 799, Series of 2013
Germany	Statutory	BGB § 288 (2) and (5); § 247 (Basiszinssatz)
France	Statutory	Code de commerce, art. L441-10 (ECB refinancing rate plus 10 points) and D441-5 (40 euro per invoice)
Japan	Contractual	Civil Code arts 404 and 419(1); statutory rate 3 percent for 1 April 2026 to 31 March 2029 (Ministry of Justice)
Singapore	Contractual	Rules of Court 2021, O. 17 r. 5(1): 5.33 percent a year on money payable under a court order, absent agreement
Mexico	Contractual	No statutory B2B late-payment rate built in; the contract's rate applies

Worked example: UK B2B invoice paid 47 days late

A consultancy in Manchester invoices a business client £5,000 on 1 April 2026 with payment agreed for 1 May 2026, and the client pays on 17 June 2026, 47 days after the agreed day. Under section 4 of the Late Payment of Commercial Debts (Interest) Act 1998, statutory interest runs from the day after the agreed payment day, and the 2002 rate order sets it at 8 per cent over the Bank of England rate in force on the 31 December before it starts to run. Bank Rate was 3.75 percent on 31 December 2025, so the rate is 11.75 percent. Interest = 5,000 × 0.1175 × 47 / 365 = £75.65. Section 5A adds a fixed sum of £70 for a debt of £1,000 or more but under £10,000, so the claim totals £5,145.65. GOV.UK suggests sending a new invoice that adds the interest.

Simple versus compound interest

The calculator uses simple interest for every jurisdiction except India's MSMED row. Simple interest is what the EU Late Payment Directive prescribes, since Article 2(6) defines statutory interest as simple interest at the reference rate plus at least eight percentage points, and what the UK Act provides: under section 1 a qualifying debt carries simple interest, and GOV.UK's worked example divides the yearly figure by 365 for a daily one. India's MSMED Act is different: where a buyer has not paid a micro or small supplier by the date agreed in writing, which section 15 caps at 45 days from acceptance of the goods or services, or within 15 days of acceptance where no date is agreed, section 16 requires compound interest with monthly rests at three times the bank rate notified by the Reserve Bank of India. For the India row the calculator therefore adds each month's interest to the balance: a rest falls every month on the day of the month interest started, and a month's interest is the balance times the rate times that month's days over 365. The Act fixes the monthly rests and the rate; where in the month a rest falls and how a part month is counted are this calculator's method, so check them against the award or contract you are working from. The gap from simple interest grows with time: £10,000 at 11.75 percent simple accrues £1,175 in a year, while the same nominal rate compounded monthly accrues £1,240.

Reading contract interest clauses

Clauses you may see in business contracts: "interest at 1.5% per month" (18 percent a year as simple interest, about 19.56 percent if compounded monthly), "the lesser of 18% per annum and the maximum permitted by law" (which defers to any cap in the governing law), and "ECB reference rate plus 8 percent" (the Late Payment Directive's own formula, written into the contract). For a contractual jurisdiction, enter the annual rate the clause produces and the calculator applies it as simple interest; if the clause compounds, the figure shown is the lower one. In Canada, section 4 of the Interest Act limits a rate stated per day, week or month to 5 percent a year unless the contract also states the yearly equivalent.

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 implies a right to statutory interest into business-to-business contracts. Under section 4, interest runs from the day after the agreed payment day or, where no day was agreed, after the end of the relevant 30-day period, subject to the Act's limits on long agreed terms. The rate is 8 percent a year over the Bank of England rate in force on the 30 June or 31 December before interest starts to run. Section 5A adds a fixed sum per debt: £40 for a debt under £1,000, £70 from £1,000 to under £10,000 and £100 for £10,000 or more, plus reasonable recovery costs above that sum. GOV.UK notes that statutory interest cannot be claimed where the contract sets a different rate.

How does the EU Late Payment Directive work?

Directive 2011/7/EU defines statutory interest for late payment as simple interest at the reference rate plus at least eight percentage points; for countries using the euro, the reference rate is the European Central Bank's main refinancing rate. The creditor is also entitled to a fixed sum of at least EUR 40, payable without a reminder. A payment period agreed between businesses may not exceed 60 calendar days unless expressly agreed and not grossly unfair to the creditor, and public authorities must in general pay within 30 calendar days. National law may go further: Germany sets nine percentage points over the base rate where no consumer is involved (BGB § 288(2)), and in France, service-public.fr explains, the Code de commerce recommends the ECB's key rate plus 10 points for late-payment penalties, with a EUR 40 recovery charge per invoice.

Why does the calculator hold no US statutory rate?

The calculator has no United States rate built in. The federal rules it could draw on, the prompt payment rules in FAR subpart 32.9, apply to invoice payments on federal government contracts: FAR 32.904 sets when the agency's payment is due, and under FAR 32.907 the paying office adds an interest penalty automatically when it pays after that date. Those rules do not cover payments between private businesses, and the calculator holds no state's rate either, so for the United States it applies the rate you enter: the one your contract states.

Does the calculator use simple or compound interest?

Simple interest for every jurisdiction except India's MSMED row. The EU Directive defines statutory interest as simple interest, section 1 of the UK Act says a qualifying debt carries simple interest, and GOV.UK's example divides a yearly figure by 365. India's MSMED Act requires compound interest with monthly rests at three times the RBI bank rate when a micro or small supplier is not paid by the date agreed in writing (at most 45 days from acceptance) or, with no agreed date, within 15 days of acceptance, so the India row adds each month's interest to the balance, with a rest every month on the day of the month interest started. Where your contract specifies compounding in another jurisdiction, the figure here is lower than the contract gives.

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

Multiply by 12 for the annual rate: 1.5 percent per month is 18 percent per year, which is the figure to enter as the contractual rate. If the clause compounds monthly, the effective annual rate is 1.015 to the power of 12, minus 1, or about 19.56 percent; the calculator applies simple interest, so its figure is then the lower one. Wording such as per annum points to a yearly rate, and compounded monthly is explicit.

Sources for these rules

Late Payment of Commercial Debts (Interest) Act 1998, section 4: statutory interest starts to run on the day after the relevant day, the agreed payment day or the last day of the relevant 30-day period (The National Archives (legislation.gov.uk))
Directive 2011/7/EU, Article 2(6) and (7): statutory interest for late payment is simple interest at the reference rate plus at least eight percentage points; for a member state whose currency is the euro, the reference rate is the ECB rate for its most recent main refinancing operations (The National Archives (legislation.gov.uk), Official Journal text)
§ 288 Abs. 2 BGB: neun Prozentpunkte über dem Basiszinssatz bei Rechtsgeschäften ohne Verbraucher; Abs. 5: Pauschale von 40 Euro (Bundesministerium der Justiz (gesetze-im-internet.de))
Délais de paiement entre professionnels et pénalités de retard (vérifié le 7 août 2026): pénalités d'au moins 3 fois le taux de l'intérêt légal, le Code de commerce recommandant le taux de refinancement de la BCE en vigueur au 1er janvier ou au 1er juillet majoré de 10 points (12,15 % puis 12,40 % en 2026); indemnité forfaitaire de 40 € par facture (art. L441-10 et D441-5) (Direction de l'information légale et administrative (entreprendre.service-public.gouv.fr))
Micro, Small and Medium Enterprises Development Act, 2006 (No. 27 of 2006), sections 2(b), 15 and 16: payment by the date agreed in writing, never more than forty-five days from acceptance, or before the appointed day (the day after fifteen days from acceptance) where nothing is agreed; then compound interest with monthly rests at three times the bank rate notified by the Reserve Bank (Office of the Development Commissioner (MSME), Ministry of MSME (Gazette of India print))
Late Payment of Commercial Debts (Interest) Act 1998, section 5A: a fixed sum of £40 for a debt less than £1,000, £70 for £1,000 or more but less than £10,000, £100 for £10,000 or more, and reasonable recovery costs above it (The National Archives (legislation.gov.uk))
Late Payment of Commercial Debts (Interest) Act 1998, section 1(1): it is an implied term in a contract to which the Act applies that any qualifying debt created by the contract carries simple interest (The National Archives (legislation.gov.uk))
Late Payment of Commercial Debts (Interest) Act 1998, section 2(1): the Act applies to a contract for the supply of goods or services where the purchaser and the supplier are each acting in the course of a business (The National Archives (legislation.gov.uk))
Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, art. 4: 8 per cent per annum over the official dealing rate in force on the 30th June or the 31st December immediately before the day on which statutory interest starts to run (The National Archives (legislation.gov.uk))
Late commercial payments, charging interest: statutory interest is 8% plus the Bank of England base rate; not claimable where the contract sets a different rate; the annual figure divided by 365 for daily interest; a new invoice adding the interest (GOV.UK)
Official Bank Rate history: every change since 1975, the latest 3.75% from 18 December 2025 (Bank of England)
Interest Act (R.S.C., 1985, c. I-15), section 3: where interest is payable and no rate is fixed by the agreement or by law, the rate is five per cent per annum; section 4: a rate stated per day, week or month is limited to five per cent per annum unless the contract states the equivalent yearly rate (Justice Laws Website (Department of Justice Canada))
Directive 2011/7/EU on combating late payment in commercial transactions, Article 3: 30 calendar days after receipt of the invoice where no period is fixed, and contractual periods over 60 calendar days only if expressly agreed and not grossly unfair (The National Archives (legislation.gov.uk), Official Journal text)
Directive 2011/7/EU, Article 4: where the debtor is a public authority, a payment period of no more than 30 calendar days after receipt of the invoice, longer only if expressly agreed and objectively justified, and never more than 60 calendar days (The National Archives (legislation.gov.uk), Official Journal text)
Directive 2011/7/EU, Article 6: a fixed sum of at least EUR 40 for recovery costs, without a reminder, plus reasonable compensation for costs above it (The National Archives (legislation.gov.uk), Official Journal text)
FAR 32.901(a): subpart 32.9 applies to invoice payments on all contracts, except contracts with payment terms and late payment penalties established by other governmental authority (Acquisition.gov (General Services Administration))
FAR 32.904, Determining payment due dates (U.S. General Services Administration)
FAR 32.907(a): the designated payment office will pay an interest penalty automatically, without request from the contractor, when it paid after the due date (Acquisition.gov (General Services Administration))
Key ECB interest rates, main refinancing operations (fixed rate): 2.15% with effect from 11 June 2025, 2.40% from 17 June 2026, 2.65% from 16 September 2026 (European Central Bank)
Current rates panel on the Reserve Bank's home page: Bank Rate (5.75% when read on 12 October 2026; the calculator does not keep it) (Reserve Bank of India)
Civil Code of the Philippines (Republic Act No. 386), art. 1956: no interest is due unless expressly stipulated in writing; art. 2209: where the debtor of a sum of money incurs in delay, the indemnity is the interest agreed upon and, in the absence of stipulation, the legal interest, which is six per cent per annum (Supreme Court of the Philippines E-Library)
Circular No. 799, Series of 2013, Rate of interest in the absence of stipulation: six percent per annum for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of an express contract as to the rate; effective 1 July 2013 (Bangko Sentral ng Pilipinas)
§ 247 BGB: Basiszinssatz, Veränderung zum 1. Januar und 1. Juli, Bekanntgabe durch die Deutsche Bundesbank im Bundesanzeiger (Bundesministerium der Justiz (Gesetze im Internet))
Basiszinssatz nach § 247 BGB: 1,52 % gültig ab 1. Juli 2026, 1,27 % ab 1. Januar 2026 und ab 1. Juli 2025 (Deutsche Bundesbank)
民法 (Civil Code, Act No. 89 of 1896) 第四百四条: the statutory rate, reviewed for each period of three years; 第四百十九条第一項: damages for late payment of money at the statutory rate when the debtor first became liable for delay, or at the agreed rate where it is higher (e-Gov 法令検索 (Government of Japan))
令和８年４月１日以降の法定利率について: the statutory interest rate stays at 3 percent a year for the third period, 1 April 2026 to 31 March 2029 (法務省 (Ministry of Justice, Japan))
Rules of Court 2021, Order 17 rule 5(1): money payable under an order carries interest as agreed between the parties or, if there is no agreement on interest, simple interest at 5.33% per year (Singapore Statutes Online (Attorney-General's Chambers))

Checked October 12, 2026. All sources