A business sending 120 invoices a month with 50% paid 20 days late has $98,630 sitting in overdue invoices at any moment and loses about $84,000 a year to carrying it, writing some of it off and chasing the rest. Sending reminders before the due date and following up on a schedule saves $44,555 of that.
You invoice $3,600,000 a year and 50% of it is paid 20 days late. That leaves $98,630 overdue at any time. Each year you write off $72,000 and spend 180 hours chasing. With the cost of carrying the overdue cash, late payment costs you $84,358 a year. With reminders before the due date and follow-up on a schedule, the cost falls to $39,803 and $59,178 of cash comes back to you.
- Cash sitting in overdue invoices at any time: $98,630
- Of which: cost of carrying it, per year: $6,658
- Of which: invoices never collected, per year: $72,000
- Of which: staff time chasing, per year: $5,700
- Hours chasing, per year: 180
- Cash freed, one time, with automated follow-up: $59,178
- Saved per year, with automated follow-up: $44,555
How the number is worked out.
Three costs, added up: what it costs to carry the cash that is late, what is never collected, and the time spent asking. The cash itself is shown separately, because for most small businesses that is the number that hurts.
- 01Invoiced a year. Invoices a month times twelve times the average invoice. The defaults are ours; take yours from the accounting system.
- 02Cash tied up. Invoiced value paid late, times days late, divided by 365: the overdue balance outstanding on an average day. Atradius found about half of US B2B invoice value overdue, collected about 20 days after the due date. Xero’s platform shows US small businesses paid about 9 days late on average across all invoices.
- 03Carrying it. The overdue balance times the cost of money. The default is the prime rate, 6.75%. A line of credit or a card costs more; cash you do not have costs the most.
- 04Never collected. Invoiced value times the write-off share. Atradius’s respondents, mostly mid-sized exporters, report bad debt at 8% of credit sales. The default is 2%, set low for a local service business that knows its customers.
- 05Chasing. Late invoices times 15 minutes each, at the bookkeeper’s wage plus 30% overhead. Reminders, calls, statements, and matching the payment when it finally lands.
- 06With automated follow-up. A reminder before the due date, follow-ups on day 1, 7 and 14, a statement at 30, and a person only on the disputes. The default brings days late to 8, the write-off to 1%, and takes over 80% of the chasing minutes.
The defaults.
Dials you change are marked in colour. The last column says where each default comes from and what kind of source it is.
| Dial | Yours | Default | Where the default comes from |
|---|---|---|---|
| Invoices sent per month | 120 | 120 | JRW, 2026 Our default |
| Average invoice | $2,500 | $2,500 | JRW, 2026 Our default |
| Invoices paid late | 50% | 50% | Atradius Payment Practices Barometer, 2024 Survey |
| Days late, on average | 20 | 20 | Atradius Payment Practices Barometer, 2024 Survey |
| Invoiced value never collected | 2% | 2% | JRW, 2026 Our default |
| Minutes chasing each late invoice | 15 | 15 | JRW, 2026 Our default |
| Cost of money, annual rate | 6.75% | 6.75% | Bankrate, 2026 Official |
| Hourly wage of the person chasing | $24 | $24 | US Bureau of Labor Statistics, Occupational Outlook Handbook, 2025 Official |
| Benefits and overhead on top | 30% | 30% | JRW, 2026 Our default |
| Days late, after | 8 | 8 | JRW, anchored on Xero, 2026 Our default |
| Value never collected, after | 1% | 1% | JRW, 2026 Our default |
| Chasing time an agent takes over | 80% | 80% | JRW, 2026 Our default |
Sources.
The late-payment shares come from a trade credit insurer’s survey and an accounting platform’s own data. The cost of money is the published prime rate; the wage is federal data.
Our defaults. The share paid late and the days late come from Atradius’s survey of mid-sized US exporters, which runs higher than most local businesses; lower them if your customers pay faster. The write-off default is a quarter of what those exporters report. The days-late-after figure, 8, is our assumption for the invoices that still go late once every invoice gets reminders and follow-up. Most of the saving comes from write-offs falling from 2% to 1%, which is also our assumption; set both to your own. The saving is labelled before our fee, which is fixed. How we set defaults.
- JRW default. JRW, 2026. No public benchmark we trust. The number is a round figure in the range we see in engagements, chosen so the headline errs low. Replace it with your own. Source
- B2B payment practices trends, United States. Atradius Payment Practices Barometer, 2024. US companies surveyed mid-2024 by a trade credit insurer: about half of B2B invoice value overdue, collected about 20 days after the due date on average; bad debt 8% of B2B credit sales. The 2026 North America edition, over 600 businesses, puts overdue invoices at 23% of receivables and late payment as a problem for seven in ten companies. Mostly mid-sized exporters, so the write-off figure runs high for a local service business. Source
- Wall Street Journal prime rate. Bankrate, 2026. 6.75% since December 11, 2025. What a bank's best customers borrow at; a small business line of credit or card runs higher, so the cost-of-money default errs low. Source
- Bookkeeping, accounting and auditing clerks, median pay. US Bureau of Labor Statistics, Occupational Outlook Handbook, 2025. Median pay $24.36 an hour, $50,670 a year, May 2025. Before benefits and overhead. Source
- Days late once every invoice gets reminders and follow-up. JRW, anchored on Xero, 2026. Xero's US small businesses run about 9 days late on average across all invoices. The default assumes the invoices that still go late run 8 days late once reminders and follow-up go out on every one, down from 20. Different populations; replace both with your own. Source
Also consulted
- Small Business Late Payments Report 2026. Intuit QuickBooks, 2026. 1,305 US business owners surveyed December 2025, plus the quarterly Small Business Insights panel of about 5,000: 59% have invoices more than 30 days overdue, up from 47% a year earlier; those owed are owed $17,700 on average. A software vendor's survey, no independent replication. Source
- Small Business Insights, US late payments. Xero, 2026. Invoices on the vendor's accounting platform: US small businesses waited 28.8 days on average to be paid in the first quarter of 2026, 9 days past due, up from 8.4 days late in the fourth quarter of 2025; 29.3 days in the second quarter of 2026. Long-run average about 8.8 days late. One platform's customers. Source
- Small Business Credit Survey, employer firms. Federal Reserve Banks, via Coleman Report, 2024. Financial challenges reported by employer firms in the 2024 survey: rising costs 75%, paying operating expenses 56%, uneven cash flow 51%. Convenience sample; reported second-hand. Source
Where the days go.
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Before the due date
The agent sends the invoice with the PO number and the backup the customer’s AP team will ask for, confirms it was received, and sends a reminder with a payment link three days before it is due. How we automate invoice follow-up.
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After it
The agent sends a polite note on day 1, day 7 and day 14, written for the customer and the amount, with the invoice attached, and a statement at 30 days. At 45 days, a person gets a short list of who to call.
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Matching and disputes
The agent matches payments to invoices as they land, in the accounting system you already use, and sends short pays and disputes to a person with the history attached instead of into the next reminder.
Automated follow-up tells you sooner which customers can’t pay.
Questions.
- Why is the carrying cost so small?
- Because interest is cheap next to a write-off and next to the owner’s time. For a small business, the larger cost of late payment is the cash it does not have: QuickBooks found 59% of small businesses carrying invoices more than 30 days overdue, owed $17,700 on average, and the Federal Reserve’s survey found 56% struggling to pay operating expenses. The calculator shows the cash tied up on its own line for that reason.
- Is half of invoices late right for us?
- Atradius found about half of invoice value overdue among its B2B respondents; Xero’s platform data puts the average invoice 9 days late. A consumer-facing business with card payment on the spot is far lower. Pull an aging report and put in your own.
- Do automated reminders annoy customers?
- Accurate, polite reminders that carry the invoice rarely do. A reminder for an invoice the customer already paid does, which is why the agent matches payments first. Disputes go to a person.
- What about charging late fees?
- Most states allow them if the contract says so, but they are rarely collected. A reminder before the due date does more. Put a fee in the terms if you like; do not count on it.
“Copy a link” puts your dials in the address, and we store nothing. A browser agent that supports WebMCP can run this calculator as estimate_late_invoice_cost. How the calculators work.
Get paid sooner without chasing anyone.
Send us your aging report and tell us your accounting system, and we’ll show you which follow-ups an agent can take over. Fixed price per automation. If the first one misses the scope we agreed, you don’t pay.
Book a call (opens in a new tab)Related: Late invoices: what they cost and how to get paid sooner · Accounts payable statistics · Invoice processing cost · AI automation for finance teams