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Free calculator · Business

Late Payment Cost Calculator

A late invoice is not just annoying. Work out what a slow-paying customer is actually costing you, once you count the cash tied up, the time spent chasing it, and the job it held up.

The short version

A late payment costs more than the invoice number suggests. There is the cost of that cash being tied up instead of working for you, the time you spend chasing it, and the knock-on cost if the delay held up starting your next job. Add them up and a "small" delay is often a real hit to your profit, not just an inconvenience.

Late payment cost = Cost of cash tied up + Chasing time + Knock-on delay cost
1. The late invoice

What you are owed, and how late it is.

$
days
Beyond your agreed payment terms
%
Your overdraft rate, or 10% as a rough stand-in
2. The knock-on cost

The time it took, and any work it held up.

hrs
Calls, texts, follow-up invoices
$
$
If being short of cash held up starting your next job. Set to 0 to skip
This late payment cost you
$0
on top of the work you already did
Cost of cash tied up$0
Chasing time cost$0
Delayed-job cost$0
Total hidden cost$0
As a share of the invoice0%

A guide, not financial advice. Figures are estimates. Use your own overdraft rate or a sensible stand-in, and your own hourly rate.

The invoice number is not the real cost

Most trades track whether an invoice got paid. Far fewer track what it cost them to wait for it. That cash sitting unpaid is not free to you, it is money that could have covered next week's materials, paid a wage, or just sat in the business as a buffer. Every week it is late, it is quietly costing you.

A late payment is not one cost, it is three: the cash tied up, the time spent chasing it, and whatever it held up starting. Most trades only ever notice the first one, if that.

Why deposits fix most of this before it starts

A deposit up front does two things at once. It gets some of the job's cost covered before you have spent a cent on materials, and it filters out the customers who were never going to pay properly in the first place. If someone will not put down a deposit, that is useful information, not an inconvenience.

Chasing well, without burning the relationship

A friendly reminder on the due date, a firmer follow-up a week later, and a clear next step if it still has not landed, that is the whole playbook for most cases. Agree payment terms and any late-payment interest in writing before the job starts, so if you ever need it, it is not a surprise to either of you.

Questions tradespeople ask

What counts as a "late" payment?
Any payment made after the terms you agreed with the customer, whether that is on completion, 7 days, 14 days or 30 days. Put your terms in writing on the quote or invoice so there is no ambiguity about when a payment actually becomes late.
What is a reasonable deposit to ask for?
It varies by trade and job size, but 20 to 50% up front or on the day you start is common, with the balance on completion. For jobs with a lot of materials cost up front, lean toward the higher end so you are not funding someone else's job out of your own pocket.
How do I chase a late payment without damaging the relationship?
Start friendly: a short reminder on or just after the due date. If it is still unpaid a week later, follow up more firmly and reference the agreed terms. Keep a clear next step in mind, such as a final notice or late-payment interest, so you are not just repeating the same ask.
Should I charge interest or a late fee?
Many trades build a late-payment interest clause into their terms, and it can help, but the bigger win is stopping the problem before it starts with clear terms and a deposit. Check what is enforceable where you operate before relying on a late fee.
What if a customer refuses to pay a deposit?
Treat it as information. Most genuine customers have no issue putting down a deposit for a decent-sized job. Someone who pushes back hard on a reasonable deposit is telling you something about how the rest of the job, and the payment, is likely to go.

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