How to Calculate Late Payment Charges

Many contracts for goods, services and even rental property contain clauses that entitle the provider of the goods or services to receive additional funds if payments are not tendered on time or by their due date. The term that determines the value of the late payment will either be a flat fee or a percentage of the amount of the past due payment. By entering into a contract with this language, you agree to be bound of all of the terms and conditions stated within the contract, including additional payment of funds if payments are not made on time.

Instructions

1

Determine how your late fee is calculated. This information is located in the contract, invoice or other payment agreement document that you entered into with the other party. Often, the late payment fee will be a percentage of the amount due that compounds daily. In some cases, the late charge will be in the form of a flat fee. If you cannot find this information in your contract, contact the company or business that you owe the payment to and request the information.

2

Calculate the amount of the penalty fee owed on your late payment. Multiply the penalty fee rate by the total amount of your payment. Multiply the resulting quotient by the number of days that your payment is past due. For example, if your penalty fee is 1 percent of the amount due per day and your amount due is $100, your penalty fee for a payment that is one day late would be $1. If your penalty fee is a flat rate amount, no additional calculation is needed.

3

Add the amount of your penalty fee to the total amount that is past due to determine the total payment that must be submitted to make your account current. For example, if your total late fee is $1 on a $100 past due bill, the total amount that you must remit is $101.