Glossary

Late fee

A late fee is an extra charge, or interest, added when an invoice is not paid by the due date.

Last updated 26 October 2026

A late fee is a consequence written into the contract for unpaid invoices. It may be a fixed admin charge, a percentage of the overdue amount, or interest that runs from the due date. It only works if the due date itself is clear. A late fee with no start date is hard to apply.

Clients often strike this line because their policy is not to pay late fees. That is a policy, not a reason the invoice can sit. A common swap is a shorter due date, a larger deposit, or a right to pause the work if an invoice is overdue. Many freelancers find the pause more useful than a percentage they will never chase.

Many contracts also say the fee does not replace the duty to pay the original invoice. The late fee is extra. It is not a discount if they eventually pay. It is also not a penalty you invent in an email after the fact; if it is not in the signed paper, you usually do not have it.

In the UK, statutory interest on late commercial debts is set under the Late Payment of Commercial Debts (Interest) Act 1998; gov.uk states the rate as 8% plus the Bank of England base rate. Some papers use that rate, some set their own, some skip interest and keep a pause. This page does not choose for you.

Agencies that invoice monthly should say whether the late fee applies per invoice or across a running account, and whether a disputed line pauses only that line. Otherwise a fight about one asset holds a whole campaign’s cash.

A worked example

An invoice due on 15 May is still unpaid on 22 May, so the contract’s late-fee line adds a small weekly charge until it is paid. The freelancer’s paper also lets them pause new work after 7 days overdue. They send a factual notice pointing at both lines, pause the next sprint, and do not invent a higher rate than the contract names.

How it shows up in a contract

Sample wording · our own drafting

If the Client does not pay an undisputed invoice by the due date, interest accrues on the overdue sum at [the rate set in this agreement] from the due date until payment. The late charge does not replace the Client's duty to pay the invoice. The Supplier may suspend the Services while any undisputed invoice is more than [7] days overdue.

In Plain English

If an undisputed invoice is late, the extra charge written here starts on the due date and runs until it is paid. The original invoice is still owed. If it is more than 7 days late, the supplier can stop work.

Common mistakes

  • Adding a late fee in an invoice footer that was never in the signed contract.
  • Setting a late fee with no due date, so nobody can say when it starts.
  • Treating a client’s “we don’t pay late fees” policy as if it amends the paper.
  • Relying on a late fee alone and omitting a pause, then continuing to work for free while the invoice ages.

What the legislation says

Sources

Related

The legal wording governsLast reviewed 26 October 2026Pending lawyer review