A late payment fee nudges clients to pay on time and compensates you when they do not. To be enforceable it has to be agreed up front and reasonable — you cannot spring a surprise charge after the invoice is overdue.
Set it out before you bill
State your late fee in your terms and on the invoice itself before the work or the due date — for example in your payment terms and a line on the invoice footer. If the client never agreed to it, you generally cannot add it later.
How much can you charge?
Common choices are a monthly percentage (often 1–1.5% of the overdue balance per month) or a flat fee. Keep it reasonable: a fee that looks like a penalty rather than fair compensation can be unenforceable, and some places cap interest rates.
Your statutory rights
In the UK, the Late Payment of Commercial Debts Act lets businesses charge statutory interest (8% plus the Bank of England base rate) plus a fixed recovery sum on overdue B2B invoices, even without a clause. In the US, late fees are set by your contract and limited by state usury caps. Check what applies where you operate.
Example wording
Put a clear line in your terms, such as: “A late fee of 1.5% per month will be applied to balances not paid within 30 days of the invoice date.”
Apply it fairly
Send a polite reminder first — most late payments are oversights. Keep the relationship intact: a reminder plus a clearly-stated fee usually gets you paid without having to enforce anything.
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