Late payment fees: how to add them to an invoice

A late fee only works if it was agreed

A late fee printed for the first time on an overdue invoice is hard to collect. It needs to be in the quote, contract or terms that the client accepted before the work started, and repeated on the invoice.

Whether you may charge one, and how much, is governed by law that differs between countries and states and sometimes between kinds of customer. Check the rule that applies to you before writing one in.

How to word it

Keep it short and specific: the rate or amount, and when it starts. For example, a percentage per month on overdue balances, from the day after the due date. Put it in the Terms box of the invoice.

Chasing a payment that is late

Start with a polite reminder as soon as the invoice is overdue: attach the invoice again and say the due date. If that does not work, follow up by phone, then in writing with a clear date by which you expect payment. Keep a record of what you sent and when.

Prevent it

Short terms, easy ways to pay, and invoicing promptly all reduce late payment more reliably than fees. Many people also take a deposit for larger jobs so they are never owed the whole amount.

Questions

Can I charge interest on an unpaid invoice?

Sometimes. It depends on your agreement and on local law. Check before you add it.

Where do I put the late fee?

In the Terms box, so it prints at the bottom of the invoice, and in your quote or contract so the client has agreed to it.