Chasing clients for late payments can be exhausting. I’ve been considering implementing late fees on my invoices but unsure about the best approach.
What rates do you typically set, and how do you communicate this without losing future projects?
I’ve tried a few different approaches over the years and here’s what actually works:
Set clear terms upfront:
- 1.5% monthly fee after 30 days
- Mention it in your contract AND on every invoice
- Never surprise clients with fees they didn’t know about
Communication is key. I frame it as standard business practice, not punishment. Something like “Net 30 terms, 1.5% monthly service charge applies to overdue balances.”
Reality check though - I rarely enforce the actual fee. Just having it there makes most clients pay faster. When someone’s really late, I’ll waive it if they’re apologetic and pay quickly after I follow up.
What I’ve learned: Good clients pay on time regardless of penalties. Problem clients will find reasons not to pay no matter what. The fee mainly helps with the middle group who just need a gentle push.
Start with reasonable rates and be willing to negotiate. Losing a chronically late paying client isn’t always bad anyway.
I just ask for payment upfront now. Way easier than chasing people around later.
I just put net 15 on mine and call it good.
I put late fees right in my contract upfront - 1% per month after 30 days.
You’ve got to set this from day one. Most clients pay on time anyway and never see the fee. For the ones who don’t, I shoot them a reminder email saying the fee kicks in soon. That usually gets them moving.
I just add a simple line at the bottom of my invoices: “2% late fee applies after 30 days.” Nothing fancy.
Most clients don’t even notice it until they’re late. Then they see it and suddenly remember to pay. It’s like magic.
I’ve only charged the fee maybe 3 times in 8 years. One client got mad and left, but they were already a pain to work with. The other two paid up and started paying on time after that.
The trick is keeping it reasonable. I’ve seen people try 5% or 10% fees and clients just get angry. 2% is annoying enough to motivate payment but not so high that it feels like loan sharking.
Also, I always send a friendly reminder email first. Something like “Hey, just checking if you received the invoice.” Give them a chance to pay before mentioning the fee kicks in tomorrow.
Set your terms in the contract and stick to them. I charge 1.5% monthly after 30 days - same rate my material suppliers hit me with. If it works for the lumber yard, it works for my clients. The trick is actually following through. I send one reminder at 30 days, then slap on the fee at 35 days. No exceptions. Clients who whine about standard payment terms aren’t worth keeping. Waiving fees just teaches people they can pay late without consequences. Better to dump a bad client than let them walk all over you.