Do You Charge Late Payment Interest on Weekends and Holidays?

Guides · Updated October 2026

Do you charge late payment interest on weekends and holidays? Short answer first, because I know you are skimming this while looking at an overdue invoice: in most contracts, yes. Interest accrues on calendar days, and calendar days include Saturdays, Sundays, and holidays. Your client did not stop owing you money because the bank was closed. The longer answer is about the two exceptions that catch people out, and both of them live in the contract wording, not in common sense.

Start with the default rule. Simple daily interest is principal times rate times days, divided by 365, or by 360 if your contract uses a 360 day year. The days in that formula are calendar days. Nothing in the standard formula skips a Saturday. Take a $5,000 invoice at 12 percent annual interest, paid 14 days late. The interest is $5,000 times 0.12 times 14 divided by 365, which is about $23.01. Those 14 days include two weekends, four weekend days in total. If you excluded weekends, you would count 10 days and get about $16.44. The difference is $6.57 on a small invoice. On a $50,000 invoice paid 60 days late, the weekend difference is over $200. Small invoices hide this. Large ones do not.

Now the first exception: the due date itself. Many contracts include a non-business day clause saying that if a payment date falls on a weekend or holiday, payment is due on the next business day instead. That clause moves the deadline, and some versions also say no interest accrues for the moved period, while others say the extension is included in the interest calculation. Read that sentence twice, because those two versions produce different numbers for the same invoice. A contract that says payment may be made on the next business day with the same effect as if made on the due date is forgiving the weekend. A contract that says the extension is included in the computation of interest is not. Same situation, opposite result, and the difference is one clause you probably skipped when you signed.

Do you charge late payment interest on weekends and holidays under a business days clause?

The second exception is a contract that defines the interest period in business days rather than calendar days. Some loan agreements and larger commercial contracts do this, and they usually define business days carefully, often excluding Saturdays, Sundays, and bank holidays in a named city. If your contract says interest accrues for each business day, weekends genuinely do not count. But do not assume this from silence. Silence means calendar days in most standard drafting, and a client who argues otherwise will need to point to words in the contract, not to fairness. If you want business days, write business days, define them, and name the holidays that count.

Grace periods work differently again, and mixing them up with interest accrual is the most common mistake I see in these questions. A grace period is a window before a late fee or interest starts, and it usually runs on calendar days too. A 15 day grace period that starts on a Friday includes two weekends. Some mortgage contracts add a rule that if the last grace day falls on a weekend or holiday, payment is accepted without penalty on the next business day. That is a contractual term, not a general law, and it applies to the fee, not necessarily to interest. Keep the three concepts separate in your head: the due date, the grace period, and the interest accrual period. They can each follow different day counting rules in the same contract.

You are probably reading this because a client just told you weekends should not count, or because you are writing a contract and want to avoid that argument. If you are the one charging, my recommendation is plain: write one sentence into your interest clause now, before the next dispute. Something like, interest accrues daily on the unpaid balance, including weekends and holidays, from the day after the due date until payment is received. That sentence costs nothing and ends the argument. If you would rather exclude weekends, write that instead, and accept that you are giving up roughly 2 days of interest in every 7, about 29 percent of the accrual, for the sake of goodwill. Either choice is defensible. An unwritten choice is not, because it turns a math question into a relationship argument.

One practical note on counting, since this is where arithmetic errors creep in. Count from the day after the due date through the date payment is received, and be consistent about whether the payment date itself counts. Most daily interest formulas count the days elapsed, meaning a payment 10 days after the due date accrues 10 days of interest, not 9 or 11. If your contract uses a 360 day year, say so on the invoice, because a client checking your math with 365 will get a smaller number and assume you overcharged. Transparency here is not generosity. It is how you get paid without a second argument about the first argument.

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Related: Grace Period Before Interest · Simple vs Compound Interest · Interest Clause in a Contract

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