Do I need a clause in my contract to charge this?

Effectively yes. US has no automatic statutory right to add interest to a private commercial invoice — your contract or terms of trade should specify the rate. Without one, you are limited to the default legal rate on liquidated debts, typically only recoverable once you pursue the claim.

How is late payment interest calculated?

Simple interest on a daily basis: invoice amount × (annual rate ÷ 365) × days overdue. Interest normally runs from the day after the due date. The calculator above shows the formula with your own numbers.

Can I really send an invoice for the interest?

Yes — the standard practice is a short statement or updated invoice showing the principal, the daily interest accrued to date and the legal basis (Contract law; state legal-interest and usury statutes). Many creditors find the demand itself prompts payment. This site provides information, not legal advice; for significant sums, confirm your position with a professional before escalating.

Late Payment Interest in United States (2026)

1.5% per month (18%/yr) — common contract term — No federal statutory rate for private invoices — contract terms govern, subject to state usury limits. State "legal rates" apply to liquidated debts absent a contract rate. On a $5,000 invoice 60 days overdue, the money already owed to you looks like this:

Total owed on a $5,000 invoice · 60 days late

$5,147.95

Growing $2.47 every day it stays unpaid

principal: $5,000
interest: $147.95

Rate verified 2026-07-06 · Source: U.S. Treasury — Prompt Payment · Methodology

Calculate your invoice

Rate prefilled from the US default (1.5% per month (18%/yr) — common contract term) — override it if your contract sets its own.

Invoice amount

Due date

60 days overdue

Annual rate

US default: 1.5% per month (18%/yr) — common contract term

Total now owed to you · US

$5,147.95

$5,000 principal · 60 days overdue at 18%

interest accrued: $147.95
growing daily by: $2.47

Simple interest: amount × (18% ÷ 365) × 60 days. Information, not legal advice — contract terms can override statutory defaults.

The rule in plain English

The US has no federal statutory late-payment interest for private invoices. Whether you can charge, and how much, is a matter of your contract first and state law second.

The near-universal commercial convention is a late fee clause of 1% to 1.5% per month (12–18% per year) stated on the invoice and agreed in your terms before work starts. Without an agreed clause, you generally cannot unilaterally add interest — though many states apply a statutory "legal rate" to liquidated (fixed, undisputed) debts once payment is due.

State legal rates vary widely — from 5% in Illinois and Michigan to 9% in New York and 10% in California. Pick your state below for the exact rule and rate.

Government work is the exception: the federal Prompt Payment Act makes agencies pay interest automatically on late invoices, at a rate set semi-annually by the Treasury.

Legal basis: Contract law; state legal-interest and usury statutes.

Worked example

invoice = $5,000, 60 days overdue, rate = 18.00%

daily interest = $5,000 × (18.00% ÷ 365) = $2.47

interest = $2.47 × 60 days = $147.95

total owed = $5,147.95

What to include in your demand letter

A short, factual letter recovers more invoices than a heated one. Checklist (general guidance, not legal advice):

Invoice number, date, original due date, and the exact principal outstanding.
The interest calculation shown line by line — principal, rate (1.5% per month (18%/yr) — common contract term), days overdue, daily amount — so there is nothing to dispute.
The legal or contractual basis for the interest (Contract law; state legal-interest and usury statutes).
A single clear deadline (7 or 14 days is customary) and the payment details — remove every excuse for delay.
What happens next if unpaid: a letter before action, small claims / court filing, or referral to collections — stated plainly, without threats you don’t intend to keep.
A note that interest continues to accrue daily until payment — quote the per-day figure from the calculator above.

FAQ

What interest can I charge on a late invoice in United States (overview)?: No federal statutory rate for private invoices — contract terms govern, subject to state usury limits. State "legal rates" apply to liquidated debts absent a contract rate. On a $5,000 invoice 60 days overdue, that is about $147.95 in interest. (Contract law; state legal-interest and usury statutes; verified 2026-07-06.)
Do I need a clause in my contract to charge this?: Effectively yes. US has no automatic statutory right to add interest to a private commercial invoice — your contract or terms of trade should specify the rate. Without one, you are limited to the default legal rate on liquidated debts, typically only recoverable once you pursue the claim.
How is late payment interest calculated?: Simple interest on a daily basis: invoice amount × (annual rate ÷ 365) × days overdue. Interest normally runs from the day after the due date. The calculator above shows the formula with your own numbers.
Can I really send an invoice for the interest?: Yes — the standard practice is a short statement or updated invoice showing the principal, the daily interest accrued to date and the legal basis (Contract law; state legal-interest and usury statutes). Many creditors find the demand itself prompts payment. This site provides information, not legal advice; for significant sums, confirm your position with a professional before escalating.

This page is general information about United States (overview), verified 2026-07-06 against U.S. Treasury — Prompt Payment. It is not legal advice, and statutory rules have exceptions and transition rules that a short summary cannot capture. Contract terms often override statutory defaults. For significant or disputed sums, consult a qualified professional in your jurisdiction.

Other jurisdictions

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