Late payment fee wording for invoices
A late fee gives customers a reason to pay on time, but only if it's stated clearly before the work starts and applied consistently. Here's wording you can copy, and what to check before using it.
This is general information, not legal advice. Rules on late fees and interest vary by state and country, so check what applies to you, or ask your accountant.
Where the wording needs to appear
- In your contract, quote or terms of service, which the customer agrees to before you start. This is the part that makes the fee enforceable.
- On every invoice, so the terms are in front of them when they pay.
- In your reminder emails, once a fee is about to apply or has been added.
Wording for your contract or terms
A percentage per month:
Invoices are due within 30 days of the invoice date. Balances not paid by the due date will incur a late charge of 1.5% per month (18% per year), or the maximum rate permitted by law if lower, until paid in full.
A flat fee:
Payment is due within 14 days of the invoice date. A late fee of $25 will be added to any invoice not paid by its due date, and a further $25 for each additional 30 days it remains unpaid.
A flat fee or a percentage, whichever is greater (useful when invoice sizes vary a lot):
Late payments incur a charge of $25 or 1.5% of the outstanding balance per month, whichever is greater, not to exceed the maximum permitted by law.
Wording for the invoice itself
Short enough for the invoice footer or the "message on invoice" box:
Payment due by [due date]. A late fee of 1.5% per month applies to balances unpaid after the due date.
Terms: Net 30. Late payments are subject to a $25 fee plus 1.5% monthly interest.
Wording for a reminder email
Before the fee applies:
Just a reminder that invoice #[number] for [amount] is due on [date]. As per our terms, a late fee of [fee] applies to payments received after that date.
After the fee has been added:
Invoice #[number] is now [days] days past due, so a late fee of [fee] has been added per our terms, making the balance [new amount]. If you pay by [date], I'm happy to waive the fee this once.
Offering to waive the fee for prompt payment often works better than insisting on it: it turns the fee into a reason to pay now.
Setting a fair rate
- 1% to 1.5% per month is a common range for percentage fees. Many places cap the rate, so the "or the maximum permitted by law" wording protects you.
- Flat fees are simpler to explain and work well for smaller invoices, where 1.5% is only a few dollars.
- Give a grace period of a few days if your customers pay by check or bank transfer that can take time to arrive.
Before you charge one
- Make sure the customer agreed to the terms before the work, not on the first overdue invoice.
- Apply it consistently. Charging some customers and not others invites disputes.
- Weigh the relationship. For a long-standing customer who's late for the first time, a phone call usually beats a fee.
- In QuickBooks Online, you can turn on late fees under Account and settings, then Sales, where it's available on your plan, or add the fee to the invoice by hand.
Know when the clock starts
A late fee only helps if you notice the invoice is late. CashWatchdog checks your QuickBooks Online company every morning and emails you the invoices that just went past due, so you can send the right note on the right day. For the follow-up emails themselves, use our free invoice reminder templates.