How to calculate late payment interest in Xero and import it as draft invoices

Does Xero add interest automatically?

No. The request Sales Invoices - Add interest to late invoices on Xero Product Ideas was opened on 29 March 2012. It has the status Accepted and 1,119 votes. On 7 July 2025 Xero's community manager wrote that "there isn't any committed plans around a function to add interest to invoices", and suggested for now that you state late charges in your invoice payment terms or edit the invoice and add a line for the fee.

First, work out the interest

The usual sum is simple interest on the amount still unpaid: amount due x yearly rate x days late / 365. Some terms use a daily or monthly rate instead. Use whatever your contract says.

Example. An invoice for £3,300.00 was due on 6 September 2026. Counting to 13 November 2026 is 68 days. At 8% a year: 3,300 x 0.08 x 68 / 365 = £49.18.

One invoice: Xero's own way

1. In the Sales menu, select Invoices, then open the invoice.
2. Click the menu icon, then select Edit.
3. Add a line for the interest, saying which invoice, which dates and which rate.
4. Click Update.

Xero Central says Xero will not tell your customer about the change, so send them the new version. It adds that if you have already sent the invoice, voiding it and creating a new one can be better in some cases (Edit an invoice).

On a paid or part-paid invoice you cannot change the amounts without removing the payment first, so a separate new invoice for the interest is simpler. It leaves the original as it was.

Many invoices: export, calculate, import as drafts

1. Export. In the Sales menu, select Invoices, pick the tab, optionally narrow the dates with Search, then click Export. Xero exports up to 500 transactions at a time, so use batches for more. Each line item is one row (Export invoices and bills out of Xero).
2. Calculate. In a spreadsheet, keep the unpaid invoices that are past their due date, work out the days late and the interest on each, and add them up per customer. Check part-paid invoices in Xero, because a part payment changes the balance.
3. Get the template. Go to Sales > Invoices > Import and click Download template file.
4. Fill it in. The only required columns are ContactName and InvoiceNumber. Do not delete columns or change headings. The contact name must match Xero exactly, or you get a duplicate contact. An invoice number that already exists in Xero is not imported. Dates are DD/MM/YYYY in the UK and MM/DD/YYYY in the US. AccountCode and TaxType must match Xero exactly. Use one row per invoice line.
5. Import. Click Browse, choose your file, say whether the amounts are tax exclusive or inclusive, click Import, then Complete Import if there are no errors.

Xero imports the invoices as drafts, which you can edit or approve (Import customer invoices). Ask your accountant which account and tax rate to use.

If you are in the UK

GOV.UK sets statutory interest between businesses at 8% plus the Bank of England base rate. You cannot claim it if your contract sets a different rate. You can also charge a fixed sum for recovery costs on top of interest: £40 on a debt up to £999.99, £70 from £1,000 to £9,999.99 and £100 from £10,000. This is information, not legal advice.

To get the figure for one invoice, use the UK late payment interest calculator. For an Irish invoice the rate is the ECB rate plus 8 points and changes every half-year: use the Ireland late payment interest calculator.

Option: Lateby

Atesen Software makes Lateby, a web tool that does the middle steps for a whole export. The manual way above works without it.

• What it does. You load your Xero sales invoice export. It works out the interest on each late invoice at the UK rate, Bank Rate plus 8%, or at your own rate. Options include a grace period, a minimum charge, a fixed sum and an "already billed up to" date, so nothing is charged twice. It then builds a Xero import file with one draft interest invoice per customer, and a PDF notice for each.
• Where it runs. In your browser. The file is not uploaded and there is no Xero login.
• What it does not do. It does not connect to Xero, create invoices or send anything. You import the file, check the drafts and approve them yourself. Xero's export has no payment dates, so an invoice already paid late is not included, and a part-paid invoice is charged on its current balance for the whole period.

Price. The free plan works out interest for every customer, on screen and in a summary CSV, and makes the import file and notices for the first three customers in each batch. The Practice plan covers every customer and any number of Xero organisations for US$19 a month or US$190 a year. The code FOUNDING40 makes the first month US$11.40 or the first year US$114, until 30 November. You can get a full refund within 14 days of any charge. Paddle adds sales tax where it applies.

Try Lateby free

Which route fits

• One or two invoices: by hand in Xero.
• A batch, if a spreadsheet suits you: export, calculate, import drafts.
• A batch every month, or many clients: Lateby. To raise the interest from a tool connected to Xero instead, see how to charge interest on overdue invoices in Xero.

Atesen Software is independent. Xero is a trademark of Xero Limited, and this page is not affiliated with or endorsed by Xero. The statements from Xero Central, Xero Product Ideas, GOV.UK and the Lateby site were checked on 13 November 2026. Menus, prices and offers can change.

Questions about this guide: support@atesensoftware.com.