Add interest to late invoices in Xero

Xero has no built-in way to add interest to an overdue invoice. The idea “Sales Invoices – Add interest to late invoices” dates from 2012 and is marked Accepted, but on 7 July 2025 Xero wrote that there “isn’t any committed plans around a function to add interest to invoices”.

The manual way in Xero

Xero’s own suggestions on that idea are:

• put your late-payment terms in the invoice template’s payment terms;
• edit the invoice and add a line for the late fee, using Xero’s inbuilt calculator;
• or look for an app in the Xero App Store.

GOV.UK’s guidance for UK businesses is to send a new invoice if you decide to add interest. Done by hand, that means working out days late and interest for each overdue invoice, then raising one invoice per customer.

What Lateby does

• Reads your Xero invoice export (CSV), or the Aged Receivables Detail report saved as Excel. Paid, draft, voided and awaiting-approval invoices, credit notes and invoices not yet due are skipped.
• Works out simple interest on each overdue invoice: amount still due × yearly rate × days late ÷ 365 (or 360), rounded to the cent per invoice. Use your own contract rate, or the UK statutory rate.
• Makes a Xero import file with one draft interest invoice per customer (and currency), one line per late invoice, with the calculation in the line description.
• Makes one PDF notice per customer listing each late invoice, the days and the interest, with your payment details.
• Handles monthly runs: set “interest already billed up to”, or load last run’s summary CSV, so the same days are never charged twice.
• Optional: a grace period, a minimum charge per customer, a fixed late fee or the UK fixed sums.

To import, in Xero go to Sales › Invoices › Import and choose the file. The interest invoices arrive as drafts for you to check and approve. See how the import file is coded.

What it doesn’t do

• Xero’s export has no payment dates, so Lateby can’t work out interest on invoices that were paid late and are now paid. A part-paid invoice is charged on the amount still due today for the whole period.
• It doesn’t create invoices in Xero or email your customers. You import the file and send the invoices yourself.
• It doesn’t connect to Xero. Everything runs in your browser.

Lateby is a calculator, not legal advice. Charge interest only where your terms or the law allow it, and only to business customers: interest on consumer debts is regulated differently.

More guides

• UK statutory late payment interest: 8% plus Bank Rate
• Late payment compensation: £40, £70 or £100 per invoice
• Record late-payment interest in Xero as Interest Income

Lateby is independent and not affiliated with or endorsed by Xero. Xero is a trademark of Xero Limited. This guide was checked against the linked sources on 27 October 2026; Xero changes its product, so check the current Xero Central article if a menu looks different.