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What the late invoice owes under your terms.

If your signed terms include a grace period, a monthly interest rate or a flat late fee, this works out what they add up to on an overdue invoice. Whether you can charge it is a separate question, and it starts with your state's rules.

$
days
%
Example only. Use the rate your signed terms state, and check your state's limits.
$
0 if your terms don't have one.
days
30 is the simple convention. Use what your terms say (365 ÷ 12 = 30.42).
Days interest runs35
Interest$42.00
Total late charge$67.00
Same rate per year (simple)18%

This is arithmetic, not legal advice. Redline doesn't add late fees for you; on Solo it flags unpaid invoices at day 3, 7 and 14 and tells you who to call.

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Arithmetic, not legal advice.

Limits on late fees and interest vary by state, and some depend on whether the customer is a homeowner or a business. A late charge generally has to be in the agreement the customer accepted before the work, not added after. Check your state's rules, and have your terms reviewed, before you bill a late charge. This page doesn't suggest a rate.

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How the math works

Interest runs only after the grace period, so the chargeable days are days past due minus the grace days (never below zero). Interest is the invoice amount times the monthly rate, times chargeable days over the days in a month (30 by default, an input you can change). That's simple interest on a 30-day month, the easy convention to explain to a customer. It doesn't compound.

The flat fee is added once, and only if the invoice is still late after the grace period. If the customer pays inside the grace period, the late charge is zero.

The yearly figure is the monthly rate times 12. It's there because state limits are often written as an annual rate, so you can compare your terms with the rule that applies to you.

Worked example

A $2,400 invoice, a 10-day grace period, an example rate of 1.5% a month and a $25 flat fee written into the terms:

Days past dueDays interest runsInterestFlat feeTotal late charge
80$0.00$0$0.00
155$6.00$25$31.00
4535$42.00$25$67.00
7565$78.00$25$103.00

The rate and fee are examples to show the math, not suggested terms. 1.5% a month works out to 18% a year, simple.

What to watch for

  • Terms first, invoice second. If the late fee wasn't in the estimate or contract the customer agreed to, adding one later is asking for a dispute.
  • Put the due date and the late terms on every invoice, in plain words.
  • A call usually collects faster than a fee. Some owners only charge late fees on accounts that stop answering.
  • Partial payments change the balance interest runs on. Rerun the numbers on what's still owed.
  • Keep a record of when you sent the invoice and every reminder. If it goes further, the dates matter.

Questions contractors ask

Can I add a late fee to an invoice that's already overdue?

Only if your agreement with the customer allowed for it, and only within your state's limits. This calculator can't tell you either. If you're not sure, ask a lawyer who handles contractor work in your state.

Why simple interest on a 30-day month?

It's the easiest version for a customer to check by hand, and it's a common way for short terms to describe it. If your terms count a month differently, change the days-per-month input to match. If they use another method, such as compounding, follow your terms instead.

Does Redline add late fees for me?

No. Redline doesn't calculate or add late fees, and it never contacts your customer on its own. On Solo ($29 a month), with chasing on, it flags an unpaid invoice at day 3, 7 and 14 after you sent it and pushes you a note on who to call (push alerts need the iPhone app). If you want to send a reminder, ask the chat to draft one; it goes from your Gmail only after you approve it.

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