How to charge a late fee on an invoice
A late fee encourages on-time payment. To charge one fairly, tell the customer about it before the work starts and repeat it on every invoice.
Agree it in advance
Put the late fee in your contract or quote and on the invoice. A fee the customer first sees after paying late is hard to collect.
Common ways to charge
- A percentage per month, such as 1.5 percent
- A flat fee, such as $25 after 15 days
- A percentage and a flat fee together
Check the rules
Some places limit how much interest or late fees you can charge. Check your local rules or ask an accountant before setting a rate.
How to write it
Example: Payment is due within 30 days. A late fee of 1.5 percent per month applies to overdue balances.
Questions
Should I charge a late fee on every overdue invoice?
Many businesses waive it once for good customers and enforce it after that. It is your choice, but be consistent.
Can I add the fee after sending the invoice?
Only if the customer agreed to it earlier. Otherwise it is better to send a reminder.
Free tool: Late Fee Calculator
Free, no signup. Download as a PDF.
General information, not legal, tax, or accounting advice. Rules vary by place.