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Late Payment Fee

Adds a monthly charge to overdue invoices so paying you on time is cheaper than paying you late.

When to use it: Use whenever you invoice after the work, to give clients a reason not to sit on your invoice.

The clause

Late Payment. Any invoice not paid by its due date will accrue a late fee of
[1.5%] per month (or the maximum rate permitted by law, if lower) on the
outstanding balance until paid in full. The Contractor may suspend work and
withhold delivery of any work product while an invoice remains overdue.

Replace anything in [brackets] with your own details before using.

Why this clause matters

Without a cost attached, a late invoice is an interest-free loan the client has no reason to repay quickly. A monthly fee reframes the incentive, and the right to suspend work gives the clause teeth beyond the fee itself.

How to use it

  • Set a lawful rate. 1.5% per month (about 18% annually) is a common freelance figure, but statutory caps vary by country and state — the "maximum permitted by law" fallback keeps you compliant. Confirm your local limit.
  • Keep the suspension right. The clause lets you pause work and withhold delivery while payment is overdue, which is usually more persuasive than the fee.
  • Reference your due date. This pairs directly with your payment terms clause — the fee starts the day after the invoice is due.

Related terms to pair it with

Combine with Net 15 payment terms to define the due date the fee attaches to, and a kill fee clause for projects that get cancelled outright.

This is a general template for information only, not legal advice. Late fee limits are set by law and vary by jurisdiction — check your local rules and have a professional review your contract.

A late fee is a deterrent you still have to enforce. FileDue removes the need to chase at all — files stay locked until the client pays.

See how FileDue works →

Related clauses

Payment Terms (Net 15)Sets a clear invoice due date and payment window so 'I'll get to it' never becomes an open-ended wait.Kill Fee (Cancellation)Compensates you if the client cancels after work has started but before the project is finished.