Can You Charge Late Fees as a Freelancer? Yes — Here's Exactly How

Clients paying late isn't just annoying — it's expensive. The good news? You have every right to charge late fees on your freelance invoices. Here's a step-by-step guide to how to add late fees to a freelance invoice, the law that backs you up, and the exact wording to use in your contracts and emails.

Can You Legally Charge Late Fees? (UK & US)

Let's get the big question out of the way first: yes, you absolutely can charge late fees as a freelancer. In fact, in the UK, the law is squarely on your side — and has been for over two decades.

🇬🇧 United Kingdom: Statutory Right

The Late Payment of Commercial Debts (Interest) Act 1998 gives every freelancer, sole trader, and small business in the UK the automatic, statutory right to charge interest on overdue business-to-business invoices. You don't even need a contract clause — the right exists by default.

Under this Act, you can claim:

• Interest: 8% per year above the Bank of England base rate (currently 4.5%, making the total rate 12.5% per annum)
• Fixed compensation: £40 for debts up to £999.99 · £70 for debts £1,000–£9,999.99 · £100 for debts £10,000+
• Reasonable recovery costs: If your costs of chasing the debt exceed the fixed compensation, you can claim the difference

This applies to all B2B transactions — freelancer to agency, sole trader to corporation. If your client is a business and you're a business (including sole trader), you're covered.

🇺🇸 United States: Contractual Right

The US has no federal equivalent to the UK Act. Late fee rights are primarily contractual — you need a clause in your contract for it to be enforceable.

• Most states allow late fees if they're "reasonable" and disclosed in advance.
• Some states cap interest rates (usury laws) — common caps range from 6% to 25% per year.
• 1–2% per month (12–24% per year) is the standard freelance late fee in the US.
• The fee must be disclosed before work begins. You can't retroactively add late fees to an invoice with no such terms.

Bottom line: whether you're in London or Los Angeles, you have the right to charge late fees. The specifics differ, but the principle is the same — your time has value, and late payment has a cost.

How to Calculate Late Fees on a Freelance Invoice

There are two main approaches. The best one depends on your location and what you've agreed in your contract.

Option 1: Percentage-Based Interest (Most Common)

This is the standard method and the one used by UK statute. You charge a percentage of the invoice value for each day (or month) the payment is overdue.

The formula is straightforward:

For the UK statutory rate (currently 12.5% per annum, i.e. 8% + 4.5% BoE base rate):

• £1,000 invoice → daily interest of £0.34
• £5,000 invoice → daily interest of £1.71
• £10,000 invoice → daily interest of £3.42

Option 2: Flat Fee Per Period

Some freelancers prefer a flat fee — e.g. £50 for every 30-day period the invoice remains unpaid. Simpler to communicate, but doesn't scale well for larger invoices.

Whichever method you choose, state it clearly in your contract and on your invoices. Ambiguity is your enemy.

Late Fee Calculator: A Worked Example

Let's make this concrete. You invoiced £1,000 with NET 30 terms. It's now 30 days past the due date. Here's what you're owed:

£50.27 might not sound like much — but multiply it across several clients and several months, and enforcing late fees starts to matter. Use our late payment interest calculator to work out exactly what you're owed. More importantly, the mere existence of a late fee clause deters late payment. Clients who know there's a penalty tend to pay on time.

How to Add Late Fees to Your Invoice

When payment is overdue and you're ready to enforce, you need to put it on paper properly:

Step 1: Issue a Revised or Supplementary Invoice

Don't edit the original invoice. Issue a new one (or a clearly marked "revised" version) that includes:

• The original invoice number and a reference (e.g. "Re: Invoice #1042")
• The original amount as a line item
• A late payment interest line item — show the calculation (rate, number of days, amount)
• The fixed compensation amount (if claiming under UK statute)
• The new total
• A new due date (typically 7–14 days from issue)

Step 2: Reference the Legal Basis

On the invoice, include a brief note such as:

For US-based freelancers, reference your contract clause instead:

Step 3: Send It Alongside a Notification Email

Pair the revised invoice with a clear email explaining what you've done and why — sample template below.

Sample Contract Clause for Late Payment

Prevention beats cure. The single most effective thing you can do is include a late payment clause in every contract before work begins:

How to Communicate Late Fees to Clients

Knowing how to add late fees to a freelance invoice is one thing. Communicating them without torching the relationship is another. Here's a framework:

Before the Project: Set Expectations

• Include the late fee clause in your contract (see above)
• Walk the client through payment terms during onboarding — don't bury them in fine print
• State the terms on every invoice (e.g. "Late payment interest of 1.5%/month applies after the due date")

When Payment Is Late: Escalate Gradually

1. Days 1–7: Send a polite reminder. No mention of late fees yet.
2. Days 7–14: Firmer follow-up. Mention that late fees will apply if the invoice isn't settled soon.
3. Days 14–30: Issue the late fee formally. Send a revised invoice with interest calculated, plus a notification email (below).
4. Days 30+: Escalate — consider formal recovery options.

The key: be consistent, professional, and matter-of-fact. Late fees aren't punitive — they're compensation for the real cost of late payment. Frame them that way.

Sample Late Fee Notification Email

When you're ready to formally apply the late fee, send this alongside your revised invoice:

Frequently Asked Questions

Can I charge late fees if there's no contract?

In the UK, yes — the Late Payment of Commercial Debts Act applies automatically to B2B transactions, contract or not. In the US, it's much harder without a signed agreement, so always use a contract.

What if my client refuses to pay the late fee?

Reiterate the legal or contractual basis. If they still refuse, you have options: mediation, small claims court (UK debts under £10,000), or a debt collection agency. See our guide on what to do when a client won't pay.

Will charging late fees damage my client relationships?

Handled professionally, rarely. Most clients respect clear, enforced payment terms. The ones who object to a legitimate late fee are usually habitual late payers — and those relationships may not be worth preserving.

Should I waive the late fee if they pay quickly after the notice?

Your call. Many freelancers waive it once with a friendly note, then enforce it the second time. Consistency is key — if you always waive, the clause loses its deterrent power.

Can I charge late fees on consumer (B2C) work?

The UK Late Payment Act only covers B2B transactions. For consumer work, you'd need a contractual clause with rates that are reasonable under consumer protection law. In practice, most freelance work is B2B.

Stop Chasing Late Payments Manually

You now know how to add late fees to a freelance invoice — the law, the maths, the contract clause, and the email template. But the hardest part isn't knowing what to do — it's doing it consistently while juggling actual client work.

Prefer to handle it yourself? Grab the Late Payment Email Swipe File — every email from first nudge to formal late fee notice, pre-written and ready to customise. Just £7.

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Written by the team at Landolio — tools and templates for freelancers who'd rather do great work than chase payments.