Late fee invoice template
Late fee invoice template
When an invoice is overdue and your terms allow a late fee, charge it on a new invoice that names the overdue one. The original stays as it was, and your client sees exactly what's owed and why.
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Before you charge a fee
Most late invoices are forgotten, not refused. Send a short reminder first, with the invoice number, the amount and the link the client can pay from; it often settles it in a day. If it doesn't, and your terms allow a late fee, charge it.
Agree it before you charge it
A late fee works when the client agreed to it before the work started. Put it in your quote or contract and repeat it in the notes of every invoice, for example: “Payment due within 30 days. A $50 late fee applies to invoices more than 14 days overdue.” Decide between a flat fee, which is simple to explain, and interest, which grows with the delay: 1.5% a month on $4,000 is $60 for each month it's late. In the US, what you may charge depends on the state, so check your state's limits before you set a rate.
Charge it on a new invoice
- Leave the overdue invoice as it is. It was issued with its own number and amount; changing it confuses both sets of records.
- Make a new invoice for the fee, with the next number in your series.
- Name the overdue invoice in the line: its number, amount and due date, and “per our payment terms”.
- Say in the notes what's owed in total, and thank them if the payment has crossed in the post.
UK and EU: late payment between businesses
If a business customer pays late and your contract sets no rate of its own, the law gives you interest and a fixed sum for recovery costs.
- UK interest: “8% plus the Bank of England base rate for business to business transactions”, worked out day by day while it stays unpaid.
- UK fixed sum: £40 on a debt up to £999.99, £70 from £1,000 to £9,999.99, and £100 from £10,000, charged once per payment.
- EU interest: the reference rate (for the euro, the European Central Bank's main refinancing rate) plus at least eight percentage points.
- EU fixed sum: at least €40.
Sources: GOV.UK, Late commercial payments: charging interest and debt recovery (Open Government Licence); Directive 2011/7/EU, Article 2(6) and Article 6. Each EU country sets the exact rules in its own law. This page is a guide, not legal advice.
Questions
Can I add the late fee to the original invoice?
Better not. The original was issued with its own number and amount, and changing it muddles your records and the client's. Send a new invoice for the fee that names the overdue invoice; the UK government's guidance on late payment interest says the same.
How much can I charge?
What your contract or terms say, within the law where you work. In the US the limits depend on the state, so check yours before you set a rate. In the UK and EU, if you agreed no rate with a business customer, the statutory interest and fixed sums described above apply.
Do the UK and EU rules apply to private customers?
No. Statutory late payment interest and the fixed sums are for payments between businesses (and from public authorities). With consumers, you can only charge what your contract allows under consumer law.
Does One Page Invoice add late fees for me?
No. You decide whether to charge one and send the late fee invoice yourself. Start from this template: it has the line and the note ready to fill in.