Can freelancers legally charge late fees?

Yes, freelancers can charge late fees, but they must include late fee terms in their contract or invoice before work begins. The fee must be reasonable (typically 1-1.5% monthly) and comply with local usury laws.

What is the most common late fee structure?

The most common structure is a monthly percentage of 1-1.5% (12-18% annually). This is the industry standard because it scales with invoice size and is easy for clients to understand.

How do I add late fee terms to my invoices?

Include a clear statement on every invoice, such as: 'Payment due within 30 days. A late fee of 1.5% per month will be applied to overdue balances.' Make sure this matches your contract terms.

When should I start charging late fees?

Late fees typically start accruing the day after the payment due date. Most freelancers allow a 1-3 day grace period before applying fees, but this should be stated in your contract.

How much late fee is too much?

Most states have usury laws capping interest rates. Generally, 1-2% monthly (12-24% annually) is considered reasonable for B2B transactions. Rates above 18% annually may be challenged in some jurisdictions.

Free Late Fee Calculator 2026 | Calculate Invoice Late Payment Fees

How to Handle Late Invoice Payments

Can Freelancers Charge Late Fees?

Yes, freelancers can charge late fees, but there are important considerations:

Written agreement required - Your contract or invoice terms must clearly state your late fee policy before the work is done.
Reasonable rates - Most states allow 1-1.5% per month (12-18% annually). Higher rates may be considered usurious.
Clear communication - Include payment terms on every invoice ("Net 30, 1.5% monthly late fee after due date").

Common Late Fee Structures

Percentage (Most Common)

1-1.5% of invoice per month. Scales with invoice size and is the industry standard.

Flat Monthly Fee

Fixed $25-50 per month. Simple and predictable but may be too low for large invoices.

Daily Rate

$5-25 per day creates urgency but can seem aggressive and may strain relationships.

Best Practices for Late Payment Policies

Include terms in your contract - Specify payment terms, late fee policy, and collection procedures before work begins.
State terms on every invoice - Remind clients of your policy ("Due in 30 days. 1.5% monthly fee on overdue amounts").
Send reminders before due date - A friendly reminder 3-5 days before reduces late payments significantly.
Apply fees consistently - If you waive fees for some clients, document why (first-time, partial payment, etc.).
Know when to escalate - After 60-90 days, consider collections or small claims court for large amounts.

Sample Late Payment Terms

"Payment is due within 30 days of invoice date. A late fee of 1.5% per month (18% annually) will be applied to all overdue balances. If payment is not received within 60 days, the account may be referred to collections and additional fees may apply."

Invoice Late Fee Calculator