Late Payment Fees on Invoices: How to Charge Legally

Late payment fees compensate you for the cost of chasing overdue invoices and discourage clients from paying late.

Standard Late Fee Rates

• 1–1.5% per month (12–18% annually) — most common
• Flat fee — e.g., $25 after 15 days overdue
• Interest at statutory rate — varies by country/state

Legal Requirements

Late fees must be agreed in advance — include them in your contract and on every invoice. Some jurisdictions cap maximum interest rates. Check local laws before enforcing.

Sample Late Fee Wording

"A late fee of 1.5% per month (18% APR) applies to balances unpaid after the due date. Client is responsible for all collection costs including reasonable attorney fees."

How to Apply Late Fees

1. Send polite reminder before due date
2. Send overdue notice on day 1 past due
3. Add late fee line item on follow-up invoice or statement
4. Document all communication

Prevent Late Payments

Clear terms, easy payment methods, and prompt invoicing prevent most late payments. Create invoices with clear due dates using our free tool.