To charge for late payments, explicitly state your, or use a 1.5%–2% monthly fee, in your contract or invoice. Common methods include a percentage of the total, a flat fee, or interest on the overdue amount.
To charge a late payment fee, you need to include those payment expectations within your original sales agreement—it's not something you can add at the last minute. Additionally, when charging a late fee penalty, the original invoice should list both the payment due date and the late payment fee.
While there is yet to be a universal answer regarding an appropriate rate, in most cases and across most industries, a late fee rate between 1% and 2% is often considered the standard.
Ask for a commitment date on sending the late payment. Say something like, hey, it's John from Sparkling Cleaners. Your latest invoice is past due and I'd like to know if you will issue the check today''? They may say they never got the invoice, which you can resend but always get a commitment date when you call.
A simple example late fee phrase could be:
“Invoice payment is due within 30 days. Please be advised that we will charge 1% interest per month on late invoices.” If a customer is late paying an invoice, you can then follow up with a late fee letter.
Email subject: Invoice #123 is two weeks overdue
We have now reminded you several times of your payment for Invoice #123, at the amount of $____. This is just another reminder that your payment is now two weeks overdue. Please send us a response if you received these reminders, or if you lost your invoice.
Explain the circumstances that led to late payments, such as unforeseen medical emergencies or job loss. Emphasize that the situation was beyond your control and has since been resolved. Highlight improvements in your financial situation, such as a new job or increased income.
Ask for payment nicely over the phone
15 Ideas for Handling Late-Paying Customers
“We haven't received your invoice”
Or you can ask your client to send you an email acknowledgement upon receipt of your invoice. Either way, you'll have time to re-send your invoice, if necessary. You can also send a reminder email to your client one week before your invoice is due for payment.
Yes, charging a 3% credit card fee (surcharge) is generally legal in most U.S. states and follows card network rules (like Visa's 3% cap), but it depends heavily on your location and requires strict adherence to rules, such as not surcharging debit cards, capping it at your actual processing cost (not to exceed 3% for Visa/4% for Mastercard), and providing clear customer notification. Some states (like Connecticut, Massachusetts, Texas) may have their own bans or restrictions, so it's crucial to check your specific state laws.
Getting a Client to Pay an Invoice after Nonpayment
Typically, a low, percentage-based late fee is used when a payment is overdue on an invoice. Late fees usually range from 1% to 2% monthly interest rate, so staying near that range is the most reasonable approach.
You can charge interest and compensation on any invoices which have been paid late or have not been paid within your agreed payment terms.
Calculate the fee: Multiply the invoice total by the late fee percentage. For example, for a $2,000 invoice with a 2% late fee, the charge would be $40 ($2,000 * 0.02). Update the invoice total: Add the late fee to the outstanding balance. In this example, the new total would be $2,040.
To politely ask for late payment, send a friendly, factual reminder email the day after the due date, including the invoice number, amount, and a link to the original invoice, keeping a helpful tone and offering assistance for any questions or issues, while gently escalating firmness with subsequent reminders if needed, but always maintaining professionalism and offering payment options.
As such, you do not need as thorough a description of your terms. Instead, simply remind them of the agreement and identify on the invoice the sale date, payment due date, amount owed, and a notice that overdue payments will incur additional fees.
There are several steps you can take for a client who won't pay:
I'm reaching out to you to remind you that your payment of [payment total] for invoice [invoice number] with us is [number of days] overdue. According to our records, you should've received the invoice I'm referring to in the mail on July 5, 2022. This is a courtesy reminder and we understand that you're busy.
How To Handle Late Payments
These can help more customers pay on time. Hi [Name]. A friendly reminder that your payment of [Amount] for [Service] is due on [Date]. Please pay on or before that date to avoid any late fees.
10 most common excuses for late payments
A late credit card payment can negatively affect your payment history and credit rating, especially if it becomes a pattern. You'll also start to accrue credit card interest which can make any existing financial struggle even more difficult.
Dear [Name], Further to my previous correspondence, I am contacting you regarding late payment for invoice [Invoice Number]. The invoice was due on [Due Date], and payment is now overdue by [Number of Days Overdue]. Be advised that late payment interest may be applied if we do not receive payment within 30 days.