Late-payment cost calculator
The financing cost of late payment ≈ overdue balance × annual cost of capital × (average days late ÷ 365). Enter your numbers below — everything runs in your browser.
Published August 19, 2026 · Updated August 19, 2026
What this estimate includes — and what it leaves out
The figure above is only the financing cost: what it costs to bridge the gap while customers hold your cash. It deliberately leaves out the harder-to-measure costs — staff hours spent chasing and answering payer questions, discounts given to accelerate payment, and write-offs when invoices age past collectability. For most teams the all-in number is a multiple of the financing cost alone.
FAQ
How do I calculate the cost of late payments?
A simple, defensible estimate: Overdue balance × your annual cost of capital × (average days late ÷ 365). That is the financing cost of the cash you are waiting on. Add to it the staff time spent chasing and any early-payment discounts you give away, and the total is what late payment actually costs you per year.
What should I use as my cost of capital?
If you borrow (line of credit, invoice financing), use that interest rate. If you don't, use the return the cash would earn in the business — most SMBs use somewhere between 8% and 15%.
Do late fees fix late payment?
Sometimes — they work on willing-but-slow payers. They do nothing for invoices stuck on clerical blockers (missing PO, wrong recipient, unanswered question), which is a large share of most overdue books. Those need the blocker fixed, not a fee.