To charge a late fee, state it before the invoice is overdue: add a clear line to your invoice or contract, such as “1.5% per month on unpaid balances after the due date”, and then apply it only to invoices that carried those terms from the start. A fee you add after the fact is hard to collect.
A late fee gives clients a reason to pay on time, and it covers part of the cost of waiting. Below: how to set the amount, how to word it, how to calculate it, and the legal limits to check in your state.
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Step 1: decide if you want to charge one
A late fee is a trade-off. It can speed up payment, and it gives you something to point to when a client is slow. It can also sour a good relationship over a few days. Many freelancers include the clause on every invoice and then waive it for good clients who pay a little late, which keeps the leverage and the goodwill.
Think about who you bill. Businesses expect late fees in terms. Consumers and individual clients often react badly to them, and consumer rules are stricter in many places.
Step 2: choose a fee
The two common structures are a percentage of the unpaid balance and a flat fee.
| Type | Example | Good for |
|---|---|---|
| Percentage per month | 1.5% per month (18% a year) | Larger invoices; grows with the delay |
| Flat fee | $25 once the invoice is overdue | Small invoices; simple to explain |
| Percentage with a cap | 1.5% per month, capped at 10% of the invoice | When you want a limit that feels fair |
Step 3: check what the law allows
Rules differ by state and by country. Some states limit the interest rate that can be charged (usury laws), some treat late fees on consumer bills differently from business ones, and a few require specific wording. 1.5% a month is widely used in business-to-business invoicing, but it is not a safe figure everywhere. Check your state's rules, or ask your accountant or a lawyer before you put a number on your invoices.
A reasonable fee, clearly agreed in advance, is much easier to defend than a large one added later. If you invoice clients in other countries, their rules can matter too.
Step 4: write the clause
Put the clause on the invoice, and ideally in your quote or contract as well, so the client agreed to it before the work started.
Late payment: Invoices unpaid after the due date accrue a late fee of 1.5% per month (18% per year) of the unpaid balance, up to a maximum of 10% of the invoice total.
Shorter version:
A 1.5% monthly late fee applies to balances unpaid after the due date.
Step 5: calculate it
With a percentage fee, work from the unpaid balance and the number of months (or part months, if you say so).
- Be consistent about whether a part month counts as a full month, and say so in your terms.
- Apply the fee to the invoice amount only, not to a fee that was added earlier.
Unpaid balance: $1,550.00
Monthly fee: $1,550.00 x 1.5% = $23.25
Fee after 2 months: $23.25 x 2 = $46.50
Cap check: 10% of $1,550.00 = $155.00, so the cap is not reached
New amount due: $1,550.00 + $46.50 = $1,596.50
Step 6: apply it fairly and tell the client
When an invoice goes overdue, tell the client that the fee has started, and show it as its own line, so it is clear what it is. A reminder email is the right place. If the client has a good reason, such as a bank problem, waive it and keep the relationship. Never add a late fee for an invoice that did not carry the terms.
Late fees in Jiffy
In Jiffy, late fees are part of the reminder steps on Pro and Ultra: a fixed amount or a percentage with a cap, charged only on invoices that carried your late-fee terms when they were first sent. Fees stay outside the invoice total and tax, show as a separate line on the payment page, and you can waive one with a tap. See payment reminders and the pricing.