What Is a Late Fee on an Invoice?

A late fee is a charge added to an invoice when the client pays after the due date. It is either a flat amount, such as $25, or a percentage of the overdue balance, such as 1.5% per month. It is far easier to collect if the client agreed to it before the work started, usually in your contract, quote or payment terms.

Freelancers and small businesses use late fees to cover the cost of waiting for money and to give clients a reason to pay on time. Many never charge the fee. They mention it in a reminder instead: "Paying by Friday avoids the late fee on this invoice."

Put the fee on every invoice, next to the due date, in plain words. A late fee is a one-off charge, while interest on late payment builds up over time on the unpaid balance. Some businesses use the opposite incentive, an early payment discount such as 2/10 net 30.

On Pro and Business plans, SolidInvoice sends automated payment reminders when an invoice is overdue, so you don't have to chase each one yourself.

Limits on late fees and interest vary by state and country. This page is general information, not legal advice.