A client is weeks past due and you're wondering whether you can add a late fee on the invoice. Often you can, but only if it was agreed before the work started, is reasonable, and fits the law where you and your client are based.
This guide covers how to charge late fees the right way: which fee structures are common, what the rules look like in the US, UK and EU, how to calculate the amount, and late payment fee wording you can paste into your invoice and your reminder emails.
This article is general information, not legal advice. Late fee rules depend on your location, your client's location, your contract and whether the client is a business or a consumer. For a specific dispute, talk to a local attorney or solicitor.
Key takeaways
A late fee has to be agreed in advance: in your contract, proposal or the payment terms the client accepted. Don't spring one on a client after the fact.
Common structures are a flat fee (often $25 to $50), a monthly percentage (often 1% to 1.5%), or daily interest at an annual rate.
In the US, rules vary by state. Keep fees modest and check your state's interest and late-charge rules.
In the UK, businesses can claim statutory interest of 8% plus base rate and a fixed £40, £70 or £100 on late B2B payments. EU rules set interest of at least 8 points above the ECB reference rate and a €40 minimum.
Put the fee on the invoice in writing, mention it in reminders, and add it as a clear, separate line when it applies.
Can you charge a late fee on an invoice?
Yes, as long as three things are true:
The client agreed to it in advance. The fee should be in your contract, signed proposal or written terms, and repeated on every invoice. A fee that first appears on an overdue invoice is easy to dispute.
The amount is reasonable. A late fee is meant to cover the cost of waiting for your money, not to punish the client. Courts tend to look harder at fees that look punitive.
It's within local law. Some places cap interest or late charges, and the rules can differ for consumers and businesses.
If you never agreed on a late fee, add a clause to your terms for future work. In the UK and EU, business clients still owe statutory interest (see below).
Common late fee structures
There are three ways most freelancers charge late fees. Pick one, keep it simple, and use the same wording everywhere.
Structure | Example | Good for |
|---|---|---|
Flat fee | $35 once the invoice is overdue | Small invoices, where a percentage would be tiny |
Monthly percentage | 1.5% of the overdue balance per month | Most freelance invoices; scales with the amount |
Daily interest | 18% per year, charged per day | Large invoices or long delays; also how UK statutory interest works |
What late fee percentage is normal?
A late fee percentage of 1% to 1.5% per month is common for freelance and small business invoices. As simple interest that works out to 12% to 18% a year. A flat $25 to $50 is a common alternative for smaller invoices. These are conventions, not legal limits, so check them against the rules where you are.
A grace period (say, 7 days after the due date) gives clients room for a slow bank transfer and makes the fee feel fair when it kicks in.
Late fee rules: US, UK and EU
United States
There is no single federal rule for late fees on business invoices. Each state has its own laws on interest, usury and contract penalties, and they differ a lot. Two California examples show the kind of rules you'll find:
A contract interest rate keeps applying after a breach, and if a contract doesn't set a rate, California law applies 10% a year after the breach (Civil Code 3289).
A pre-agreed damages clause, which is how a late fee is often treated, is generally valid unless the other side shows it was unreasonable when the contract was made (Civil Code 1671).
Other states set different defaults and caps, and consumer rules are usually stricter. Check your state's rules, keep the fee modest, and agree it in writing.
United Kingdom
The Late Payment of Commercial Debts (Interest) Act applies to business-to-business payments. If a business client pays late, you can claim:
Statutory interest of 8% plus the Bank of England base rate. The base rate used is the one in force on 31 December (for interest starting January to June) or 30 June (for interest starting July to December). Bank Rate was 3.75% on both dates, so statutory interest is 11.75% a year for interest that starts in 2026.
Fixed debt recovery costs, once per invoice: £40 for debts up to £999.99, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. You can also claim reasonable extra costs of recovering the debt.
If you haven't agreed a payment date, a payment is late 30 days after the client gets the invoice or the work, whichever is later. You can't claim statutory interest if your contract sets a different interest rate, so pick one or the other. See GOV.UK's guidance on late commercial payments for the details.
A new Small Business Protections Bill entered Parliament in May 2026 to toughen these rules, but it isn't in force yet.
European Union
The Late Payment Directive (2011/7/EU) covers business-to-business and business-to-public-authority payments across the EU:
Businesses should pay within 60 days unless something else is expressly agreed and isn't grossly unfair. Public authorities have 30 days (60 in exceptional cases).
Late payments carry statutory interest of at least 8 percentage points above the European Central Bank reference rate. Each country publishes its own rate.
You're entitled to at least €40 in fixed compensation, plus reasonable recovery costs.
Countries can set rules that are more generous to the supplier, so check the national rate where your client is based.
For more on payment deadlines and what happens when an invoice goes out late, see our guide to late invoicing rules.
How to calculate a late fee (worked example)
Say you sent a $2,400 invoice due on net 30 terms (here's how net 30 payment terms work), and it's now 45 days overdue.
Flat fee. Your terms say $35 once the invoice is overdue. The late fee is $35, and the new total is $2,435.
Monthly percentage. Your terms say 1.5% per month on the overdue balance, prorated by day:
$2,400 × 1.5% × 45 ÷ 30 = $54
The new total is $2,454. Each extra 30 days adds another $36.
Daily interest. Your terms say 18% per year, charged daily:
$2,400 × 18% ÷ 365 = $1.18 per day
$1.18 × 45 days = $53.26
UK statutory interest. For a £2,400 invoice to a UK business client, 45 days late in 2026:
£2,400 × 11.75% ÷ 365 = £0.77 per day
£0.77 × 45 days = £34.77 interest
plus £70 fixed recovery costs (debt between £1,000 and £9,999.99)
= £104.77 in total
To skip the math, use the free late fee calculator. Enter the invoice amount and days overdue, choose a percentage per month, a flat fee, or both, and it shows the late fee, the new total, what each extra month adds and the equivalent annual rate, plus a ready-made sentence for your reminder. It uses simple interest on 30-day months, like the monthly example above.
Late payment fee wording for your invoice
Put the late fee in your contract first, then repeat it in the payment terms on every invoice. Good wording says the due date, the fee, when it starts and how often it applies.
Monthly percentage:
Payment is due within 30 days of the invoice date. Balances unpaid after the due date will be charged a late fee of 1.5% per month (18% per year) on the outstanding amount, as agreed in our contract.
Flat fee with a grace period:
Payment is due by [due date]. A late fee of $35 will be added to invoices that remain unpaid 7 days after the due date.
UK business clients:
Payment is due within 30 days of the invoice date. We reserve the right to claim statutory interest and fixed compensation under the Late Payment of Commercial Debts (Interest) Act 1998 on late payments.
You can add these terms in the notes or payment terms section of the free invoice generator or the freelance invoice template. For the rest of what an invoice needs, see how to invoice as a freelancer.
Late fee wording for reminder emails
Mention the late fee before it kicks in, then again when you apply it. Keep the tone factual: you're pointing to terms the client already agreed to.
Before the due date (heads-up):
Subject: Invoice #1042 due on [date]
Hi [Name],
A quick reminder that invoice #1042 for $2,400 is due on [date]. As in our agreement, a late fee of 1.5% per month applies to balances unpaid after that date. You can pay here: [payment link].
Thanks,
[Your name]
When the late fee is applied:
Subject: Invoice #1042 is overdue: late fee added
Hi [Name],
Invoice #1042 for $2,400 was due on [date] and is now 45 days past due. Per our agreed payment terms, a late fee of $54 has been added, so the new total is $2,454.
If payment is on its way, thank you, and let me know when it's sent. If something is holding it up, reply and we can sort it out. You can pay here: [payment link].
Best,
[Your name]
For softer first reminders and a full follow-up schedule, see our friendly reminder email examples and how to remind someone to pay you.
How to add a late fee to an overdue invoice
Check your terms. Confirm the fee was agreed and note the exact rate or amount.
Work out the amount as of a specific date, using the formula above or the late fee calculator.
Add it as a separate line item, for example "Late fee: 1.5% per month on invoice #1042, 45 days overdue." Don't fold it into the original price; the client should see exactly what changed and why.
Update the total and due date. Give a clear new deadline, such as 7 days.
Send it with a short note that references the agreed terms, like the email above.
Keep records of the original invoice, the due date, your reminders and the fee calculation, in case you need them later.
If you invoice with Onigiri, invoices past their due date show as Overdue, so you can see at a glance which ones need a follow-up. When you edit and send the invoice again, add the late fee as its own line item. Onigiri doesn't calculate or add late fees automatically, so use the calculator for the amount.
When to waive a late fee
Waiving a late fee can be the smarter move when:
It's a first late payment from a good, long-term client.
The delay was partly yours, such as a wrong amount, missing PO number or an invoice sent to the wrong person.
The client tells you before the due date and agrees a new date.
If you waive it, say so. "I've waived the late fee this time; it will apply to future late payments as per our terms" keeps the rule in place without souring the relationship.
Alternatives to late fees
Late fees work best as a backstop. These can get you paid on time without them:
Early payment discount. Offer, say, 2% off if paid within 10 days. Make sure your margins can absorb it.
Deposits or upfront payment. Ask for 30% to 50% before you start on larger projects, so less money is ever at risk.
Milestone billing. Invoice as each phase is delivered instead of all at the end.
Easy payment. A pay-by-card link removes the "I'll do the bank transfer later" delay.
Pause work. Your contract can say work stops while an invoice is overdue. This is often more effective than any fee.
