How late fees are worked out
Late fee = overdue amount × monthly rate × days late ÷ 30
1.5% a month on a $2,000 invoice that is 20 days late: 2,000 × 1.5% × 20 ÷ 30 = $20. A flat fee (for example $25 or $50) is simpler and common for rent.
Can you charge a late fee?
Generally only if the client agreed to it in advance: in your contract, your quote or the terms on your invoice. Many US states cap interest and late fees, especially for consumers and rent (often a few percent of the monthly rent or a fixed dollar cap), and some require a grace period. Business-to-business invoices have more freedom, but the fee must still be reasonable. In the EU, businesses may charge statutory interest on late B2B payments plus a €40 recovery fee.
Putting it on the invoice
- State the late fee in the terms box before the work starts: “Payments after the due date incur 1.5% interest a month.”
- Add the fee as a separate line on a new invoice or a reminder, not by changing the original invoice.
- Be consistent: waiving fees for some clients and not others causes disputes.
Before charging a fee, send a reminder
Most late payments are forgotten invoices, not refusals. Send a friendly reminder the day after the due date with the invoice attached and a payment link, and a second one a week later. Mention the late fee in the second reminder only if your terms include it.
Related calculators
- Net 30 Due Date Calculator: When an invoice is due (Net 7 to Net 90).
- Free Invoice Generator: Make a professional invoice and download the PDF.
- Rent Receipt Template: Receipt for rent paid by a tenant.
Questions people ask
What is a normal late fee on an invoice?
Between 1% and 1.5% a month is common for business invoices, where the law allows it and the client agreed. Flat fees of $25 to $50 are common for small invoices.
Is 1.5% a month too high?
It equals 18% a year. Some states cap interest at lower rates for consumers; check your state’s usury and late-fee rules.
Formula checked October 2026 · How we calculate