Late payment fee wording: examples for contracts and invoices
A late fee does two jobs: it compensates you for the cost of waiting, and — more importantly — it moves your invoice up the client's priority list. But a late fee only works if it was agreed before the work started and is worded clearly. Adding a surprise fee to an overdue invoice usually backfires and may not be enforceable.
The three common late fee structures
| Type | Example | Best for |
|---|---|---|
| Flat fee | $50 if unpaid 15 days after due date | Small invoices; simple to explain |
| Monthly percentage (interest) | 1.5% per month on the unpaid balance | Larger invoices; long delays |
| Flat fee + percentage | $25 plus 1% per month | Clients who are chronically late |
Monthly rates of 1%–1.5% are widely used in the US, but whatever you choose must stay within the maximum your jurisdiction allows. In the UK, B2B invoices are covered by the Late Payment of Commercial Debts (Interest) Act 1998, which gives a statutory interest rate and fixed compensation amounts — check the current figures on GOV.UK.
Contract clause wording
Simple percentage clause
Flat fee with grace period
Work suspension clause (pairs well with either)
Collection costs
Invoice wording
Repeat the policy on every invoice so it's never a surprise. Put it near the due date, not buried in the footer:
Or for flat fees:
How to tell a client a late fee has been applied
Keep it factual and point back to the agreement. Offer to waive it if they pay quickly — that's often the fastest route to getting paid.
Should you actually charge it?
Many freelancers keep the fee as leverage and waive it for good clients who pay promptly once reminded. That's fine — the point is that the policy exists in writing. For clients who are repeatedly late, apply it consistently, and consider requiring a deposit or upfront payment on future work.
Late fee do's and don'ts
- Do put the policy in the contract and on the invoice.
- Do include a grace period — it reads as reasonable.
- Do cap at "the maximum permitted by law" in case your rate is too high.
- Don't add fees that weren't agreed in advance.
- Don't compound interest unless your contract clearly says so.
The Get-Paid Kit includes a full set of payment-terms clauses (deposits, Net terms, late fees, suspension, kill fees, ownership-transfer-on-payment) plus a tracker that calculates late fees for you.
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