Late Fees and Overdue Invoices
Use late fees to protect cash flow while keeping customer relationships healthy. Add late fees manually to overdue invoices when needed, with clear communication and fair policies.
Why apply late fees
- Encourage customers to pay on time.
- Cover the cost of chasing outstanding balances.
- Offset the impact of delayed cash flow.
- Signal that payment terms are taken seriously.
Fair application
- Only apply to genuinely overdue invoices.
- Keep fees reasonable (2–5% or a modest flat amount).
- State the policy upfront and apply consistently.
- Offer leniency for valued customers facing short-term issues.
Legal considerations
Before charging late fees, make sure the policy is compliant and clearly communicated.
- Your terms and conditions reference the late fee policy.
- Invoices clearly state that late fees may apply.
- Fees are proportionate (not punitive) and comply with local law.
- Customers agreed to the terms before work began.
- Consult your accountant or solicitor to confirm compliance in your jurisdiction.
How to add a late fee
Late fees are added manually to overdue invoices. This gives you control over when and how to apply them based on customer relationship and circumstances.
- Invoices → Filter by Overdue → open the relevant invoice.
- Click Add line item and enter the late fee details.
- Enter description (e.g. "Late fee – 7 days past due"), amount, and date applied.
- Add a note in the internal notes section describing the situation.
- Save—the fee becomes a new line item on the invoice.
- Send the updated invoice to the customer with a polite explanation.
Tip: Track overdue invoices in your Dashboard or use the Invoices page filter to see all unpaid invoices past their due date.
Common late fee amounts
Choose a fee structure that's fair, legally compliant, and clearly communicated to customers upfront.
Fixed fee
£25 applied seven days after the due date. Simple and predictable.
Percentage fee
3-5% of the outstanding balance. Scales with invoice size.
Tiered approach
£15 at 7 days, £25 at 14 days, £40 at 30 days overdue.
Communicate the policy
- Include late fee wording on every quote and invoice ("Late fees of 3% apply after 7 days").
- Send a polite reminder one day after the due date before applying the fee.
- Explain the reason when notifying the customer—focus on covering admin time and keeping service levels high.
- Be prepared to waive the fee for loyal customers who settle quickly once reminded.
Need to fine-tune reminders? Set up automated messaging under Payments & Payouts → Reminders.