How to Add Late Fees to Invoices

1. Set the terms before the due date
2. Choose a flat fee or a percentage

To add a late fee to an invoice, set the fee in your contract or payment terms before the work starts, repeat it on every invoice, and, when a payment is late, bill the fee as its own line on an updated invoice or a separate invoice. Rules on late fees and interest depend on where you and your client are, so check local rules and ask a lawyer where needed. This page doesn't say whether any fee or rate is allowed where you are.

1. Set the terms before the due date

Put the late-fee terms in your contract, quote or standard terms, and repeat them on every invoice, so the client knows them before payment is due. The terms should say:

The amount: a flat fee, or a percentage of the unpaid balance.
When it starts: the number of days after the due date, and whether you count calendar days or business days.
Repeat charges: whether it's charged once, or again for each further period the balance stays unpaid.
What it applies to: if the client pays part of the invoice, whether the fee is charged on the unpaid balance only.
How you'll bill it: on an updated invoice or a separate invoice.

See how to set a late payment policy and invoice payment terms.

2. Choose a flat fee or a percentage

Flat fee: a fixed amount charged once the invoice is overdue. It's simple to explain and to check.
Percentage: a percentage of the unpaid balance for each period overdue, such as each month. State the period, and whether the fee can be charged again.
Stepped fee: a higher fee after further periods overdue, such as after 60 days.

If a later fee can be charged on an earlier fee, show the calculation on the invoice so the client can follow it.

3. Check the rules where you work

Late-fee and interest rules can differ from place to place. Check the rules where you and your client are based, and ask a lawyer where needed.

As one example, in the UK, the government's guidance on late commercial payments (gov.uk, last updated August 10, 2016, opened October 29, 2026) says: "The interest you can charge if another business is late paying for goods or a service is ‘statutory interest’ - this is 8% plus the Bank of England base rate for business to business transactions. You cannot claim statutory interest if there’s a different rate of interest in a contract." This applies to business-to-business payments in the UK only. It doesn't tell you what's allowed anywhere else.

4. Show the fee on the invoice

On every invoice, include a short terms line that matches your contract. For example: A late fee of 1.5% of the unpaid balance applies for each full 30 days after the due date.

When a fee is charged, bill it in one of two ways:

An updated invoice or statement that shows the original amount, any payments, the late fee as its own line and the new total.
A separate invoice for the fee only. The UK guidance above says: "Send a new invoice if you decide to add interest to the money you’re owed."

Label the fee line with the original invoice number, such as Late fee on INV-2041, so the client's accounts team can match it.

5. Tell the client

Send a reminder before the due date and again when the invoice becomes overdue. If you charge a fee, email the client with the invoice number, the due date, the days overdue, the clause in your terms and the calculation. See how to follow up on unpaid invoices.

If you decide to waive a fee, say so in writing, and decide in advance when you would waive one, so you treat clients the same way.

Sample: a late fee after a partial payment

This is a sample with invented figures and invented terms. It isn't a statement that this fee or rate is allowed where you are.

Invoice INV-2041 is for $2,400.00, dated June 1 and due June 30. The terms say: a late fee of 1.5% of the unpaid balance for each full 30 days after the due date.

July 15: the client pays $1,000.00. Unpaid balance: $2,400.00 − $1,000.00 = $1,400.00
July 30 (30 days after the due date): late fee 1.5% × $1,400.00 = $21.00
Amount now due: $1,400.00 + $21.00 = $1,421.00

The fee is charged on the $1,400.00 still unpaid, not on the original $2,400.00, because the terms apply the fee to the unpaid balance. Expressed as a yearly figure without compounding, 1.5% a month is 1.5% × 12 = 18% a year, which helps if a local rule states a limit as a yearly rate.

Where Billed fits

Billed's invoice software page says: "Set a due date on each invoice so your client knows when to pay. Invoice reports show which invoices are paid, partially paid or past due, and you can see who owes you money and send them a payment reminder. Payment reminders can be customized." Its financial reporting page says: "See your partially paid, past due and paid invoices in a glance with Invoice reports."

Frequently Asked Questions

Can I add a late fee to an invoice?

Set the fee in your contract or payment terms before the work starts and show it on every invoice. Whether a fee or rate is allowed depends on where you and your client are, so check local rules and ask a lawyer where needed.

How do I calculate a late fee?

Apply the rate in your terms to the amount still unpaid. In the sample on this page, 1.5% of a $1,400.00 unpaid balance is $21.00, so the client owes $1,421.00.

Should the late fee go on the original invoice or a new one?

Either an updated invoice that shows the fee as its own line, or a separate invoice for the fee. Label the fee with the original invoice number so the client can match it.

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