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Founder Finances

Free tool

Late-Payment Cost Calculator

Put a number on the money that arrives late.

Late payment feels like an annoyance until you price it. This estimates the working capital you are lending your customers for free, and what chasing it costs in time.

Last reviewed:

Your figures

Results update as you type. The starting figures are examples; replace them with your own. Financial inputs stay in your browser unless you choose to save them on this device.

Include only invoices you issue to business customers on payment terms. Exclude cash, card-at-point-of-sale, consumer and upfront-paid sales.

Roughly what that money would cost to borrow or earn if held.

Your result

£3,590

Estimated annual cost of being paid late

Customers take an average of 24 days beyond your terms.

Cash permanently tied up in unpaid invoices
£12,493
Extra cash tied up by lateness alone
£7,890
Annual funding cost of that lateness
£710
Annual cost of chasing time
£2,880
Cash released if everyone paid on terms
£7,890

The released cash figure is usually the persuasive one. It is money you already earned that is sitting in someone else's account. It only applies to B2B credit sales, not all revenue.

A fixed chase sequence, deposits on new work and invoicing on completion day typically recover most of this without a difficult conversation.

Assumptions this tool makes

  • The cost of funding the gap is estimated using a rate you supply, representing what that money would otherwise cost or earn.
  • Chasing time is valued at your own hourly rate.
  • Statutory interest that you could legally claim is not included — check current GOV.UK rates separately.

The formulas used

  • average_outstanding = (annual_B2B_credit_sales / 365) x days_late
  • funding_cost = average_outstanding x funding_rate
  • chasing_cost = hours_per_month x 12 x hourly_rate

Estimates only. This is a planning aid, not regulated financial advice, tax advice or a personal recommendation. Figures are rounded deliberately to avoid false precision. Your answers stay in your browser: nothing you type here is sent to us, to a partner or to an advertising platform. Read the full disclaimer.

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