Free business tool
Late Payment Cost Calculator — What Slow Payers Really Cost You
Late-paying customers do not just cause frustration — they cost you real money. Every day an invoice goes unpaid, you are effectively lending that customer money interest-free while potentially paying interest on your own overdraft or credit facilities to cover the gap. This calculator shows the true annual cost of late payments to your business.
How to use: Enter your average outstanding invoices and how many days late they typically pay. The calculator will show you the annual cost including the opportunity cost of that trapped cash.
Understanding your results
The cost of late payment has two components: the direct financing cost (interest you pay on overdrafts or credit lines to cover the gap) and the opportunity cost (what you could have done with that cash if it had arrived on time — stock, marketing, debt repayment). Together, these often amount to thousands of pounds per year for even small businesses.
Frequently asked questions
Can I charge interest on late invoices?
Yes. Under the Late Payment of Commercial Debts (Interest) Act 1998, you can charge statutory interest of 8% above the Bank of England base rate on overdue B2B invoices. You can also claim compensation of £40–£100 per invoice depending on the amount. In practice, many small businesses are reluctant to enforce this with valued customers — but simply including late payment terms on your invoices can encourage prompt payment.
How can I reduce late payments?
Issue invoices immediately (not days or weeks later), set clear payment terms upfront, send automated reminders before and after the due date, offer incentives for early payment, and consider requiring deposits or milestone payments for larger projects. Knowing who your late payers are — and how much they cost — is the first step.
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Want to know exactly who owes you and how late they are?
Chloe-AI can tell you your overdue invoices, worst payers and aged debtor breakdown in seconds. Book a free call to see it in action.
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