Late Payment Fee
A late payment fee is a charge added when an invoice is paid after its due date.
A late fee compensates the seller for overdue payment and encourages on-time settlement. It can be a flat amount, a percentage of the overdue balance, or monthly interest. To be enforceable, the fee must be agreed in advance — in the contract or stated on the invoice — and must be reasonable under local law.
Example
An invoice 30 days overdue accrues a 1.5% monthly late fee on the $4,000 balance, adding $60.
Related terms
Frequently asked questions
Can I add a late fee that was not in the original terms?
Adding a fee the customer never agreed to is risky and may be unenforceable. Set late-payment terms in your contract or standard invoice terms before the invoice goes overdue.
Should I waive a late fee for a good customer?
Waiving an occasional fee as a goodwill gesture is fine and common. Just be consistent — selectively enforcing fees can look arbitrary and damage relationships.
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