Late payment fee
A late payment fee is a charge added to an invoice when it is not paid by the due date, meant to compensate for the delay and encourage on-time payment. It is commonly 1 to 1.5 percent per month of the overdue balance, and it is only enforceable if you stated it in your terms before the work.
Making a late fee stick
A late fee only works if it was agreed up front. Put it in your contract and on every invoice, state the exact rate, and apply it consistently. Check your local rules, since some regions cap the interest a business can charge. Applied fairly and predictably, a late fee is both a deterrent and fair compensation for being kept waiting.
Frequently asked questions
How much can I charge for a late payment fee?
A common late fee is 1 to 1.5 percent per month of the overdue balance, though the enforceable maximum varies by region and some places cap it. The key rule is that the fee must be stated in your terms before the work. A fee invented after an invoice is late is difficult to enforce.
Can I charge a late fee if it was not in my contract?
Usually not enforceably. To charge a late fee you generally need to have disclosed it in the contract or on the invoice before the client agreed to the work. If you did not, you can still ask for it, but you cannot reliably enforce it. Add clear late-fee terms to every future invoice to avoid the problem.
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