How late fee calculator works
A late fee compensates you for being paid late, and its size is set by your invoice terms. The three common structures are a one-time flat fee (a fixed dollar amount once the payment is past due), a percentage per month (the classic "1.5% per month" on commercial invoices), and a percentage per year (an annual-interest style charge). Pick the structure your terms state and the tool does the arithmetic.
The fee accrues only after the grace period ends. Enter how many days the payment is past due and how many grace days your terms allow; the effective days late is the difference. Percentages are then pro-rated over that time: monthly rates use a 30-day month and annual rates a 365-day year, so 15 days late at 1.5% per month costs 0.75% of the invoice, not the full month.
The tool also annualizes the effective rate so you can sanity-check it. 1.5% per month is 18% per year — a common reference cap in jurisdictions that regulate late charges. A large flat fee on a small invoice can annualize far higher than it looks, so the result flags when the effective rate goes above 18%/yr. That is a prompt to check your contract and local law, not legal advice.