How to charge late fees on an invoice (legally)

Q: Can I add a late fee if it wasn't on the original invoice?

Generally no. To be enforceable, the late fee should be agreed in writing in a contract and/or on the invoice before the work, not added retroactively.

Q: Should I charge a percentage or a flat late fee?

Percentage fees such as 1.5% per month scale with larger invoices; flat fees are simpler for small amounts. Either is fine if disclosed up front.

A late fee gives your payment terms teeth — but it's only enforceable if you set it up correctly. Here's how much you can charge, how to word it, and how to actually collect it.

General guidance, not legal advice. Rules vary by state and country — check your local regulations for big amounts.

Are late fees legal?

Yes — late fees are legal in all 50 US states, but only if they're agreed to in writing. What makes a late fee enforceable is having it stated in a signed contract and/or printed on the invoice before the work is done. Surprising a client with a fee they never agreed to usually won't hold up.

How much can you charge?

A common, reasonable late fee is 1.5% per month (18% per year) on the overdue balance — that's the cap under many state usury laws. Flat fees (e.g. "$25 if more than 7 days late") are also fine for smaller invoices. Keep it reasonable; punitive fees can be challenged.

Example wording for your invoice/contract:
"A late fee of 1.5% per month will be applied to balances not paid within [X] days of the due date."

How to actually collect it

State it up front — in your contract and on every invoice, before the work starts.
Remind before applying it — a polite "heads-up, a late fee applies after [date]" often prompts payment without you having to charge it.
Apply it consistently — add it to the next reminder with the new total.
Stay professional — the goal is payment, not punishment.

Most of the time, a reminder beats a fee

Consistent, polite follow-up gets invoices paid before a late fee is even needed. PaidPilot sends those reminders for you, automatically.

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Frequently asked questions

How much late fee can I charge on an invoice?

A common reasonable amount is 1.5% per month (18% annually) on the overdue balance, or a flat fee for smaller invoices. Many state usury laws cap it around 1.5%/month.

Can I add a late fee if it wasn't on the original invoice?

Generally no — to be enforceable, the late fee should be agreed in writing (contract and/or invoice) before the work, not added retroactively.

Should I charge a percentage or a flat late fee?

Percentage fees (e.g. 1.5%/month) scale with larger invoices; flat fees are simpler for small amounts. Either is fine if disclosed up front.