How to Charge Late Payment Fees?

Businesses need to face many challenges in their daily activity, but late payments are among the most serious ones. A steady cash flow is essential for keeping things on track. On the one hand, it’s only fair to be compensated for your effort and receive what the client owes you.

On the other hand, if payments come late, you won’t be able to cover your monthly costs, so it’s also a matter of functionality. Using a late payment fee can be the solution for preventing such delays, as we will show below.

It may not seem the friendliest way to handle this matter, but your clients sometimes need some encouragement to respect their part of the transaction. And the fact is people usually react to a negative stimulus, so knowing they risk late payment fees, they will be more careful not to miss the deadline.

Late fees on invoices are common, so your clients probably won’t be surprised to see them on the invoice. But before you start on this path, you need to get all the information you need on this matter. Then, it’s time to find the right invoice late fee wording for the payment terms section.

How Do I Charge Late Payment Fees on an Invoice?

If you have decided that a late payment fee is the most efficient way to determine your clients to pay on time, here are the steps you need to follow:

  • First, ask yourself, ‘how much can I charge % for late fees?’ and do a bit of research. Inform your clients about your new late payment fees policy. Your regular clients wouldn’t like to discover it straight in the invoice. As for new clients, it’s always preferable to mention this beforehand.
  • Modify the payment terms section in your invoice draft, and include the late payment fee.
  • Late payment fees must also be mentioned in every new contract.

If you send the invoice at the right time and still don’t receive the money, you will have to take some extra measures.

How Much Can I Charge for Late Fees?

As we mentioned above, before adjusting your invoice, you need to ask yourself, ‘how much can I charge for late fees?’. It’s essential to find out what the law allows you to charge; the last thing you want is to get into legal trouble. There is a maximum threshold in each state, but you can also ask other local business owners what the standard late fee for invoices is.

The percentage allowed by law in each state is available online. But as a rule of thumb, you won’t have any legal issues as long as your late payment fee is under 10% per year. In practice, the typical late fees for invoices, especially for freelancers and small businesses, is 1.5% per month.


Late payments are usually just misunderstandings or honest mistakes on the client’s part. But even so, not receiving your money on time will affect your business. The easiest way to determine your client to respect the deadline is to add a late payment fee to every invoice.

With the invoice template from WeInvoice, that will be quick and effortless. While you’re browsing the website, take a look at all the other templates and invoice generators; you will definitely find some great options.