--- title: "Maximum Late Fee Laws by State - 2026 Update" description: "Maximum late fee laws for business invoices in all 50 US states and DC for 2026: each state's limit, legal interest rate, grace period and statute." url: https://www.paidnice.com/blog/late-fee-laws-by-all-us-states --- # Maximum Late Fee Laws by State - 2026 Update Written by Denym Bird Expert verified Co-founder & CEO of Paidnice Our team reviewed every state for 2026 against the statute that governs a late fee on a business invoice, with a source for each state. Reviewed by Ashley Schroder Co-founder of Paidnice Updated Nov 6, 2026 · 24 min Listen to this article, read by Denym Read by Denym Bird8 min 0:008:09 ## Summary For a business invoice, most US states set no maximum late fee: you can charge the fee your written terms state, provided a court finds it a reasonable estimate of your loss. 13 states and DC set a statutory limit that can reach a business invoice, and the map and state list below give each one with its statute. - **The common rule:** Agree the fee in writing before the invoice is due. When your terms name no rate, a state's legal interest rate may apply, on conditions that differ by state. - **States with a limit:** Georgia allows 1.5% a month on commercial accounts 30 or more days overdue, and South Dakota caps a rate printed on an invoice at 18% a year. - **Rent caps do not apply:** The caps quoted for New York ($50 or 5%) and other states are residential rent laws and do not govern a business invoice. - **Automate it:** Paidnice applies your late fee automatically after the grace period you set, on the ledger in Xero or QuickBooks. > **Editor's note, updated October 2026:** Our team checked every state on this page in October 2026. Each entry shows the law that governs a late fee on a business invoice, with the statute that sets it, so this is the most accurate state-by-state guide we have published. This guide is general information, not legal advice, so confirm your terms with a lawyer in your state. ## US late fee laws at a glance - **37 states set no statutory limit** on a late fee for a business invoice. The limit is the fee your contract states, provided a court finds it a reasonable estimate of your loss and not a penalty. Interest limits can still apply to a sole proprietor customer in Minnesota, Nebraska, New Jersey, New Mexico, North Dakota and West Virginia, as each entry explains. - **13 states and DC set a statutory limit that can reach a business invoice**: Alaska, Arkansas, Colorado, District of Columbia, Florida, Georgia, Illinois, Kentucky, Mississippi, Montana, South Dakota, Tennessee, Texas and Virginia. Most of these limit interest rather than a flat fee, and each one is listed with its statute below. - **Residential rent caps do not apply.** The figures quoted online for New York, Maryland, Maine and Tennessee come from landlord-tenant laws and govern rent only. - **Put the fee in writing first.** A late fee is easiest to enforce when the customer agreed to it before the invoice was due. When your terms name no interest rate, a state's legal rate may apply, on conditions that differ by state. To work out what a specific invoice is owed, use our [free late fee calculator](https://www.paidnice.com/blog/free-late-fee-calculator), and see [compound or simple interest](https://www.paidnice.com/blog/compound-interest-on-overdue-invoices) for whether interest should compound. ## US State Late Fee Rules Interactive guide to maximum late fees and grace periods by state A statute limits the late fee or interest on an invoice to a company No statutory limit for a company customer: your contract and a reasonableness test apply ## Select a state to view late fee rules Click on any state tile to view the maximum late fee allowed and grace period requirements for that state. This interactive map is powered by [Paidnice](https://paidnice.com) - helping businesses get paid on time with automated late fee management. For more information on late fee management and improving your accounts receivable process, visit [paidnice.com](https://paidnice.com). ‍ Free: Late payment interest calculatorWork out the interest or fee on an overdue invoice. ## What are the maximum late fees by state? Most states set no maximum late fee for a business invoice. The list below gives each state's limit on a late fee or late-payment interest, any grace period, the legal interest rate when your contract names none, and the statute. ### What is a grace period? A grace period is the number of days after the due date before a late fee applies. No state sets a general grace period for business invoices, so the period is the one your terms state. In Paidnice you set the grace period in days on each late fee policy. ### Alabama ✅ No Max Late Fee ✅ No Grace Period Alabama has no maximum late fee for business invoices. Its interest limit of 8% a year by written contract (6% if not in writing) applies to a loan or forbearance, and parties may agree any rate on a loan, forbearance or credit sale of $2,000 or more. Alabama sets no grace period. **Source:**Ala. Code §§ 8-8-1, 8-8-5, 8-8-8 ### Alaska 🔴 Maximum Late Fee: Interest up to 10% a year, or 5 points over the Federal Reserve rate if higher (contracts over $25,000 exempt) ✅ No Grace Period Alaska sets no cap on a flat late fee, but interest agreed in a contract may not exceed the greater of 10% a year or 5 percentage points above the 12th Federal Reserve District advance rate. A contract with a principal amount over $25,000 is exempt from that limit. When no rate is agreed, the legal rate is 10.5% a year, and Alaska sets no grace period. **Source:**Alaska Stat. §§ 45.45.010, 45.45.020 ### Arizona ✅ No Max Late Fee ✅ No Grace Period Arizona has no maximum late fee for business invoices, and businesses may agree in writing to any interest rate. If no rate is agreed, interest runs at 10% a year. A court can refuse a late fee that is a penalty rather than a reasonable estimate of the loss, as the Arizona Supreme Court did with a 5% late fee on a commercial loan in Dobson Bay (2017). **Source:**Ariz. Rev. Stat. § 44-1201(A)(2); Dobson Bay Club II DD, LLC v. La Sonrisa de Siena, LLC, 393 P.3d 449 (Ariz. 2017) ### Arkansas 🔴 Maximum Late Fee: Interest up to 17% a year (no cap on a flat fee) ✅ No Grace Period Arkansas sets no cap on a flat late fee, but Amendment 89 of the Arkansas Constitution limits interest on loans and contracts to 17% a year. Ark. Code § 4-57-104 lets the parties agree in writing to interest up to that rate. When a contract names no rate, the legal rate is 6% a year, and Arkansas sets no grace period. **Source:**Ark. Const. amend. 89, § 3; Ark. Code §§ 4-57-101(d), 4-57-104, 4-57-105 ### California ✅ No Max Late Fee ✅ No Grace Period California has no maximum late fee for business invoices, and the state usury limit does not reach a late charge on overdue invoices for goods sold on credit (Southwest Concrete Products v. Gosh Construction Corp.). A late fee clause is valid unless the customer proves it was unreasonable when the contract was made. When a contract states no interest rate, the debt bears 10% a year after breach. **Source:**Cal. Civ. Code §§ 1671(b), 3289(b); Cal. Const. art. XV, § 1; Southwest Concrete Products v. Gosh Construction Corp., 51 Cal.3d 701 (1990) ### Colorado 🔴 Maximum Late Fee: Interest up to 45% a year (no cap on a flat fee) ✅ No Grace Period Colorado sets no cap on a flat late fee for business invoices, but interest agreed in a written instrument may not exceed 45% a year. When no rate is agreed, interest runs at 8% a year compounded annually. Colorado sets no grace period for business invoices. **Source:**Colo. Rev. Stat. §§ 5-12-102, 5-12-103, 5-12-107 ### Connecticut ✅ No Max Late Fee ✅ No Grace Period Connecticut has no maximum late fee for business invoices, and its 12% interest ceiling applies to loans of money. When no rate is agreed, interest runs at 8% a year. A court can refuse a late fee that is a penalty rather than a reasonable estimate of the loss. **Source:**Conn. Gen. Stat. §§ 37-1, 37-4, 37-9; Berger v. Shanahan, 142 Conn. 726 (1955) ### Delaware ✅ No Max Late Fee ✅ No Grace Period Delaware has no maximum late fee for business invoices. A written interest rate is limited to 5 points over the Federal Reserve discount rate, but corporations and LLCs cannot raise a usury defense, and loans over $100,000 not secured by a residence have no limit. The same 5 points over the discount rate is the legal rate when no rate is agreed. **Source:**Del. Code tit. 6, §§ 2301, 2306 ### D.C. (District of Columbia) 🔴 Maximum Late Fee: Interest up to 24% a year on a written payment instrument (no cap on a flat fee) ✅ No Grace Period The District of Columbia sets no cap on a flat late fee for business invoices. Interest on a written instrument for the payment of money at a future time is capped at 24% a year, and business loans over $2,500 are exempt; whether an ordinary invoice counts as such an instrument is not settled. When no rate is agreed, the legal rate is 6% a year, and D.C. sets no grace period. **Source:**D.C. Code §§ 28-3301, 28-3302 ### Florida 🔴 Maximum Late Fee: Interest up to 18% a year; 5% delinquency charge on commercial installment contracts ✅ No Grace Period Florida sets no cap on a flat late fee for business invoices, but interest above 18% a year simple is usurious. A seller on a commercial installment contract may charge a delinquency charge of up to 5% of an installment that is 10 or more days late, if the contract provides for it. When no rate is agreed, the legal rate is the state judgment rate, which the Chief Financial Officer sets each quarter. **Source:**Fla. Stat. §§ 687.01, 687.02, 687.03(2)(c), 55.03 ### Georgia 🔴 Maximum Late Fee: Up to 1.5% a month on commercial accounts 30 or more days overdue 🔴 Grace Period: Interest from day 30 (none for a flat fee) Georgia lets the owner of a commercial account charge interest of up to 1.5% a month on the part that has been due for 30 days or more. A written contract can set a different rate on amounts over $3,000. When no rate is in writing, the legal rate is 7% a year. **Source:**O.C.G.A. §§ 7-4-16, 7-4-2 ### Hawaii ✅ No Max Late Fee ✅ No Grace Period Hawaii has no maximum late fee for business invoices. A written contract can set any interest rate that other law does not prohibit for credit that is not consumer credit. When there is no written rate, the legal rate is 10% a year. **Source:**Haw. Rev. Stat. §§ 478-2, 478-4(c) ### Idaho ✅ No Max Late Fee ✅ No Grace Period Idaho has no maximum late fee for business invoices, and a written contract can fix its own interest rate. When the contract sets no rate in writing, the legal rate is 12% a year. **Source:**Idaho Code §§ 28-22-104, 28-42-201(1) ### Illinois 🔴 Maximum Late Fee: Interest up to 9% a year on written contracts, unless an exemption applies (no cap on a flat fee) ✅ No Grace Period Illinois sets no maximum late fee for business invoices, but a court will not enforce a late charge that works as a penalty. Interest in a written contract is limited to 9% a year unless an exemption applies, such as a loan to a corporation, credit between a wholesaler and a retailer, or a business loan. When the contract sets no rate, the legal rate is 5% a year. **Source:**815 ILCS 205/2, 205/4(1) ### Indiana ✅ No Max Late Fee ✅ No Grace Period Indiana has no maximum late fee for business invoices, and its interest rate caps cover consumer credit only. When the contract sets no interest rate, the legal rate is 8% a year. It runs from the date an itemized bill is sent and payment is demanded. **Source:**Ind. Code §§ 24-4.6-1-102, 24-4.6-1-103 ### Iowa ✅ No Max Late Fee ✅ No Grace Period Iowa has no maximum late fee for business invoices. A business that obtains credit for business purposes may agree in writing to any interest rate or late charge, and it cannot plead usury. When the contract sets no rate, the legal rate is 5% a year. **Source:**Iowa Code §§ 535.2(1), 535.2(2)(a) ### Kansas ✅ No Max Late Fee ✅ No Grace Period Kansas has no maximum late fee for business invoices, because the 15% limit on written contract interest does not apply to business transactions. When the contract sets no rate, interest on overdue money is 10% a year. **Source:**Kan. Stat. §§ 16-201(a), 16-207(e)(5) ### Kentucky 🔴 Maximum Late Fee: Interest up to 19%, or 4 points over the commercial paper rate if lower, on $15,000 or less ✅ No Grace Period Kentucky sets no maximum flat late fee for business invoices, but a late charge that works as interest can be tested under the usury law. Interest agreed in writing is limited to the lesser of 19% or 4 points over the 90-day commercial paper discount rate when the original amount is $15,000 or less, with no limit above $15,000. A corporation cannot raise excess interest as a defense, and without a written rate the legal rate is 8% a year. **Source:**Ky. Rev. Stat. §§ 360.010, 360.025 ### Louisiana ✅ No Max Late Fee ✅ No Grace Period Louisiana has no maximum late fee for business invoices, because commercial debts are exempt from its 12% limit on contract interest. Businesses can agree in writing to any late interest or fee. When the contract sets no rate, interest runs at the judicial rate that the state resets each year. **Source:**La. R.S. 9:3500(D), 9:3509; La. Civ. Code art. 2000 ### Maine ✅ No Max Late Fee ✅ No Grace Period Maine has no maximum late fee for business invoices, and parties can agree to any finance charge on credit that is not consumer credit. When the contract sets no interest term, a court awards prejudgment interest at the one-year Treasury bill rate plus 3%, except in small claims. **Source:**9-A M.R.S. § 2-601; 14 M.R.S. § 1602-B ### Maryland ✅ No Max Late Fee ✅ No Grace Period Maryland has no maximum late fee for business invoices, but the contract must state the amount of the fee, when it applies and when it is charged. A late fee disclosed that way is not treated as interest or a penalty. The fee caps and 15-day wait in the same section apply only to consumer contracts. **Source:**Md. Code, Com. Law § 14-1315 ### Massachusetts ✅ No Max Late Fee ✅ No Grace Period Massachusetts has no maximum late fee or grace period for business invoices, and parties may agree in writing to any interest rate. Charging more than 20% a year in interest and expenses on a loan is criminal usury unless the lender has notified the Attorney General, and it is not settled whether that rule reaches a late fee on an ordinary invoice. The legal rate is 6% a year when the contract sets none. **Source:**Mass. Gen. Laws ch. 107, § 3; ch. 271, § 49 ### Michigan ✅ No Max Late Fee ✅ No Grace Period Michigan has no maximum late fee for business invoices. The Usury Act limits written interest to 7% a year, but it excludes time price differentials on credit sales. Credit to a business entity may carry any agreed written rate up to the 25% criminal usury line. **Source:**Mich. Comp. Laws §§ 438.31, 438.41, 438.61 ### Minnesota ✅ No Max Late Fee ✅ No Grace Period Minnesota has no maximum late fee for business invoices to a corporation, LLC, partnership or other organization, because it does not limit interest or fees on credit to an organization. Credit to a sole proprietor can fall under the 8% a year interest limit unless a business credit exception applies. **Source:**Minn. Stat. §§ 334.01, 334.011, 334.022 ### Mississippi 🔴 Maximum Late Fee: Interest up to 10% a year, or 5 points over the Federal Reserve rate if higher, on $2,000 or less ✅ No Grace Period Mississippi has no cap on an obligation over $2,000, where the parties may agree in writing to any finance charge and the debtor cannot raise usury as a defense. For $2,000 or less, a written rate is limited to the greater of 10% a year or 5 points over the Federal Reserve discount rate on 90-day commercial paper. Without a written rate, interest is 8% a year. **Source:**Miss. Code Ann. § 75-17-1 ### Missouri ✅ No Max Late Fee ✅ No Grace Period Missouri has no maximum late fee for business invoices when it is agreed in writing. The parties may agree to any interest rate, fee or charge on credit for business or commercial purposes, or to a corporation, LLC or partnership. With no written rate, interest on an account runs at 9% a year once it is due and payment has been demanded. **Source:**Mo. Rev. Stat. §§ 408.035, 408.020 ### Montana 🔴 Maximum Late Fee: Up to 1.5% a month on goods sold at retail, from 30 days ✅ No Grace Period Montana lets a seller of goods at retail charge up to 1.5% a month starting 30 days after the buyer's obligation arises, if the seller did not intend to extend credit beyond 30 days and sends the required statements; this does not cover services. Montana's written interest limit, the greater of 15% a year or 6 points over prime, sits in the loan statutes, and no case settles whether it reaches invoice late charges. A flat late fee may be tested as liquidated damages, which Montana enforces only where the actual loss would be impracticable or extremely difficult to fix. Without a written rate, interest on money due is 10% a year. **Source:**Mont. Code Ann. §§ 31-1-106, 31-1-107, 31-1-501, 31-1-502, 28-2-721 ### Nebraska ✅ No Max Late Fee ✅ No Grace Period Nebraska has no maximum late fee for business invoices to a corporation, partnership, LLC or trust, because its 16% interest ceiling does not apply to them. A seller's open account charges of up to 1 1/3% a month on balances unpaid more than 30 days after the statement are also outside the ceiling. Unless the parties agree otherwise, 12% a year interest runs on money due on a written instrument or settled account. **Source:**Neb. Rev. Stat. §§ 45-101.02, 45-101.04, 45-104 ### Nevada ✅ No Max Late Fee ✅ No Grace Period Nevada has no maximum late fee for business invoices, and the parties may agree in writing to any rate of interest and any fees. With no written rate, interest is the Nevada prime rate plus 2%, reset each January 1 and July 1. For an open or store account, the Nevada Attorney General has advised that only a court may award that interest. **Source:**Nev. Rev. Stat. §§ 99.040, 99.050 ### New Hampshire ✅ No Max Late Fee ✅ No Grace Period New Hampshire has no maximum late fee for business invoices. RSA 336:1 sets a legal rate of 10% a year for business transactions unless the parties agree otherwise in writing. The parties may also agree in writing to interest other than simple interest. **Source:**N.H. Rev. Stat. Ann. § 336:1, I ### New Jersey ✅ No Max Late Fee ✅ No Grace Period New Jersey has no maximum late fee for business invoices to a corporation, LLC or LLP. Written interest on a loan is limited to 16% a year, but those entities cannot plead usury, and loans of $50,000 or more are exempt; a sole proprietor or partnership is not covered by that bar. Courts treat a late charge in a negotiated commercial contract as presumptively reasonable. **Source:**N.J.S.A. §§ 31:1-1, 31:1-6; MetLife Capital Fin. Corp. v. Washington Ave. Assocs., 159 N.J. 484 (1999) ### New Mexico ✅ No Max Late Fee ✅ No Grace Period New Mexico has no maximum late fee for business invoices to a corporation, LLC or other business entity, because its maximum rate laws do not apply when a business entity is the debtor. For other debtors, interest on an open account is limited to 15% a year from 30 days after the last delivery, unless the parties agree to a higher rate. The state Supreme Court upheld a 2% a month late charge printed on a supplier's invoices (Superior Concrete Pumping, 1989). **Source:**N.M. Stat. Ann. §§ 56-8-3, 56-8-5, 56-8-9; Superior Concrete Pumping, Inc. v. David Montoya Constr., Inc., 1989-NMSC-023 ### New York ✅ No Max Late Fee ✅ No Grace Period New York has no maximum late fee for business invoices, but a late charge must be a reasonable estimate of the creditor's loss. With no agreed rate, courts award 9% interest a year. The civil usury limit (16%) and criminal limit (25%) apply to loans and forbearances, and a corporation cannot raise civil usury as a defense. **Source:**N.Y. C.P.L.R. § 5004; N.Y. Gen. Oblig. Law §§ 5-501, 5-521; N.Y. Penal Law § 190.40 ### North Carolina ✅ No Max Late Fee ✅ No Grace Period North Carolina has no maximum late fee for business invoices. It limits late charges on loans and open-end credit, but not on an exempt loan, which includes credit to a borrower that is not a natural person and credit to an individual mainly for a business purpose. Without a written rate, interest is 8% a year. **Source:**N.C. Gen. Stat. §§ 24-1, 24-9, 24-10.1, 24-11 ### North Dakota ✅ No Max Late Fee ✅ No Grace Period North Dakota has no maximum late fee for most business customers. Its interest ceiling, 5.5 points over the average 6-month Treasury bill rate and never below 7%, does not apply to corporations, LLCs, cooperatives, trusts, partnerships that file a partnership tax return, or amounts over $35,000, but it still applies to a sole proprietor on $35,000 or less. A late charge is allowed only if its amount or method of calculation is agreed in documents the customer signs. **Source:**N.D. Cent. Code §§ 47-14-05, 47-14-09, 9-08-04 ### Ohio ✅ No Max Late Fee ✅ No Grace Period Ohio has no maximum late fee for business invoices, but a late fee must be reasonable and not a penalty. With no written rate, interest on an overdue sum runs at the statutory rate that the Ohio Tax Commissioner sets each year. **Source:**Ohio Rev. Code §§ 1343.01, 1343.03, 5703.47 ### Oklahoma ✅ No Max Late Fee ✅ No Grace Period Oklahoma has no maximum late fee or grace period for business invoices. A fixed late fee must be a reasonable estimate of the creditor's loss, and interest with no agreed rate is 6% a year. **Source:**Okla. Const. art. XIV, § 2; Okla. Stat. tit. 15, §§ 214, 215, 266 ### Oregon ✅ No Max Late Fee ✅ No Grace Period Oregon has no maximum late fee or grace period for business invoices. With no agreed rate, interest on an overdue sum is 9% a year. **Source:**Or. Rev. Stat. § 82.010 ### Pennsylvania ✅ No Max Late Fee ✅ No Grace Period Pennsylvania has no maximum late fee or grace period for business invoices. The 6% interest limit in 41 P.S. § 201 covers loans of $50,000 or less, does not apply to business loans of any amount, and a business corporation cannot raise it as a defense. The 6% legal rate in § 202 applies only when a contract calls for interest without naming a rate. **Source:**41 P.S. §§ 201, 202; 15 Pa.C.S. § 1510 ### Rhode Island ✅ No Max Late Fee ✅ No Grace Period Rhode Island has no maximum late fee or grace period for business invoices. Loan interest is capped at 21% a year, or prime plus 9 points if higher, with an exemption for commercial loans over $1,000,000. In business transactions where interest is agreed or paid, the rate is 12% a year unless the parties stipulate another. **Source:**R.I. Gen. Laws §§ 6-26-1, 6-26-2 ### South Carolina ✅ No Max Late Fee ✅ No Grace Period South Carolina has no maximum late fee or grace period for business invoices. With no agreed rate, interest on a sum due is 8.75% a year. **Source:**S.C. Code § 34-31-20 ### South Dakota 🔴 Maximum Late Fee: 18% a year on an interest rate shown on an invoice ✅ No Grace Period South Dakota caps any interest rate shown on a bill, statement or invoice at 18% a year. For a rate or charge set in a written agreement, the code removes other limits unless it sets one elsewhere, and no statute caps a flat late fee. With no agreed rate, interest on an overdue sum is 15% a year. **Source:**S.D. Codified Laws §§ 54-3-1.1, 54-3-5, 54-3-16 ### Tennessee 🔴 Maximum Late Fee: Interest up to 10% a year, or the formula rate with a signed contract (no cap on a flat fee) ✅ No Grace Period Tennessee sets no cap on a flat late fee for business invoices, but the fee must be a reasonable estimate of the creditor's loss. Interest is limited to 10% a year, or to the weekly formula rate (4 points over average prime, 24% maximum) when the customer signed a written contract. The statute does not say whether a late charge on a sale invoice counts as interest. **Source:**Tenn. Code Ann. §§ 47-14-102, 47-14-103 ### Texas 🔴 Maximum Late Fee: Interest up to 10% a year, or 18% under a written Chapter 303 agreement (no cap on a flat fee) ✅ No Grace Period Texas sets no cap on a flat late fee for business invoices. Interest on an overdue invoice is limited to 10% a year unless a written agreement adopts the optional Chapter 303 ceiling, which has been 18% for business credit. With no agreed interest, the legal rate is 6% a year starting on day 30. **Source:**Tex. Fin. Code §§ 302.001, 302.002, 303.009 ### Utah ✅ No Max Late Fee ✅ No Grace Period Utah has no maximum late fee for business invoices, and the parties to a contract may agree on any interest rate. When the contract names no rate, the legal rate is 10% a year. **Source:**Utah Code § 15-1-1 ### Vermont ✅ No Max Late Fee ✅ No Grace Period Vermont has no maximum late fee for business invoices, and corporations and business borrowers may agree to rates above the 12% general rate. When the contract names no rate, the legal rate is 12% a year. Any late fee should still be a reasonable estimate of the loss from late payment. **Source:**9 V.S.A. §§ 41a, 46 ### Virginia 🔴 Maximum Late Fee: 5% of the overdue amount, if Va. Code § 6.2-400 applies 🔴 Grace Period: 7 days, if § 6.2-400 applies Virginia Code § 6.2-400 lets a lender or seller charge a late fee of up to 5% of an overdue installment if the contract states it, and a payment within 7 days after the due date counts as on time. The section sits in the lending chapter, its text has no exception for business debts, and we found no court ruling on whether it covers a business invoice, so keeping the fee at or under 5% after day 7 is the safe course. Without a credit agreement, a seller on open account may charge 6% interest a year from day 61. **Source:**Va. Code §§ 6.2-400, 6.2-301 ### Washington ✅ No Max Late Fee ✅ No Grace Period Washington has no maximum late fee for business invoices, because a party cannot plead usury on a transaction made mainly for business purposes. When the contract names no rate in writing, the legal rate is 12% a year. **Source:**RCW 19.52.010, 19.52.080 ### West Virginia ✅ No Max Late Fee ✅ No Grace Period West Virginia has no maximum late fee for business invoices. Corporations, partnerships and LLCs cannot plead usury, and usury limits do not apply to loans and installment sales made mainly for a business purpose (for individuals, $20,000 or more). When the contract names no rate, the legal rate is 6% a year. **Source:**W. Va. Code §§ 47-6-5, 47-6-10, 47-6-11 ### Wisconsin ✅ No Max Late Fee ✅ No Grace Period Wisconsin has no maximum late fee for business invoices, because its usury limit does not cover business loans or forbearances. When the contract names no rate, the legal rate is 5% a year, and any higher rate should be clearly written into the agreement. **Source:**Wis. Stat. §§ 138.04, 138.05 ### Wyoming ✅ No Max Late Fee ✅ No Grace Period Wyoming has no maximum late fee for business invoices, because its consumer credit code covers only credit to individuals for personal, family or household use. When the contract names no rate, the legal rate is 7% a year. **Source:**Wyo. Stat. § 40-14-106(e) ## Frequently Asked Questions About State Late Fee Laws ### What is a typical late fee percentage on an invoice? A common late fee on a business invoice is 1.5% a month (18% a year) on the overdue balance. Georgia sets that figure in statute for commercial accounts 30 or more days overdue (O.C.G.A. § 7-4-16). On a $5,000 invoice, 1.5% is $75 for each month it stays unpaid. A stated fee also changes behavior. In Paidnice data, 68% of businesses that start charging late fees get more invoices paid on time, against 52% of similar businesses that do not. See [our late fee data](https://www.paidnice.com/blog/do-late-fees-work#pay-on-time). Fixed fees work best: about 8 in 10 fixed late fees are paid, against about 6 in 10 percentage fees. See [fixed vs percentage fee data](https://www.paidnice.com/blog/do-late-fees-work#fixed-or-percentage). ### How much can you legally charge for a late fee? On a business invoice you can legally charge the late fee in your written terms, up to any limit your state sets. Most states set no figure, so the test is whether a court would see the fee as a reasonable estimate of your loss rather than a penalty. Where a state does set a limit, it is in the state list above with its statute. To see what this means for your own invoices, read [how much you can charge for late fees](https://www.paidnice.com/blog/how-much-can-i-charge-for-late-fees). ### Is it legal to add a late fee to an invoice? Yes, in every US state, if the customer agreed to the fee before the invoice was due and it stays within any limit in the state list. Put the fee, the grace period and how it is calculated in your contract or terms, and repeat it on the invoice. A fee added after the work, with no earlier agreement, is hard to enforce. Our [late fee policy wording examples](https://www.paidnice.com/blog/late-fee-policy-wording-examples) give you wording to copy. ### Do rent late fee caps apply to business invoices? No. The caps quoted for New York ($50 or 5%), Maryland (5%) and Maine (4%) come from residential landlord-tenant laws and govern rent only. A late fee on a business invoice falls under contract law and, in some states, the interest statutes in the state list above. ### Do I need a written contract to charge late fees? Get the customer's agreement before the invoice is due, and a written contract is how you prove it. A late fee the customer never agreed to is hard to enforce, even in states with no maximum. Put your late fee policy in your contract or terms of service, and show it on every invoice. ### What is a reasonable late fee if my state does not set one? Courts ask whether the fee was a reasonable estimate of the loss that late payment causes, judged when the contract was signed, or a penalty. A rate of 1% to 1.5% a month on the overdue balance is a figure often seen in business terms. Arizona's Supreme Court refused a 5% late fee on a commercial loan as a penalty in Dobson Bay Club II v. La Sonrisa de Siena (2017). ### How do I calculate a 1.5% late fee on an invoice? Multiply the overdue balance by 0.015 for each month it stays unpaid. A $2,000 invoice that is one month late carries a $30 fee, and $60 after two months if the fee is simple interest. The [late fee calculator](https://www.paidnice.com/blog/free-late-fee-calculator) does the sum for any rate and number of days. ### How many times can you charge a late fee? Your contract decides. Some businesses charge a fee once per invoice, and others charge interest for each month the balance stays unpaid. Whichever you choose, state it in your terms before the invoice is due, and check the state list for any interest limit. ### Can I charge late fees on the late fees themselves? Only if your written terms say so. A fee charged on an earlier fee works like compound interest, and without clear wording in your terms it is hard to enforce. Without it, charge each fee on the original invoice amount. ### Can I charge compound interest on late payments? Only if your written terms say interest compounds, and the total stays within any limit in the state list. Paidnice compounds by default with the "Include previous interest charges" setting, and you can turn it off for simple interest. See [compound or simple interest on overdue invoices](https://www.paidnice.com/blog/compound-interest-on-overdue-invoices) for the difference in cost. ### Are grace periods required everywhere? No. No state requires a general grace period before a late fee on a business invoice. Georgia's statutory 1.5% a month applies only to amounts due 30 days or more, and Virginia's 5% late charge rule counts a payment within 7 days as on time where it applies. ### What if I operate across multiple states? Check which state's law governs each contract, and name it in your terms. Where customers sit in states with different limits, either use terms that meet the strictest limit for everyone or set terms by customer. Paidnice runs [different late fee policies for different customer groups](https://www.paidnice.com/blog/different-late-fee-policies-for-different-customers) at the same time. ## Automatically issue late fees with Paidnice A late fee works only if it is charged on every overdue invoice. Xero has no automatic late fees, and QuickBooks Online only adds the fee to the existing invoice. Paidnice [issues late fees automatically when invoices go overdue](https://www.paidnice.com/late-fees), on the ledger in [Xero](https://www.paidnice.com/xero) or [QuickBooks](https://www.paidnice.com/quickbooks). ![The Paidnice late fee policy screen set to Interest Rate Per Annum at 18 percent, with the fee type, rate, grace period and tax rate numbered](https://www.paidnice.com/images/blog/apply-finance-charges-in-quickbooks-online-policy.png) ### Step 1. Work out your late fee Choose a fixed fee, a percentage of the overdue amount, or an annual interest rate charged by the day, and check the state list above for any limit. Put the fee and the grace period in your terms before you send the invoice. ### Step 2. Create a late fee policy in Paidnice Connect Xero or QuickBooks Online and create a policy with the fee, the grace period and whether it repeats. You can apply it to invoices that are already overdue, or only to new ones. Signing up is free, and your first 20 actions are free. ### Step 3. Let Paidnice issue each fee Paidnice raises each fee as a new invoice or as a line on the overdue invoice, and your reminders can name the fee before it lands. When a good customer asks, you can [waive the fee](https://www.paidnice.com/blog/waiving-late-payment-fees) in one click. *The information in this guide is general information, not legal advice. For advice on your contracts, speak to a lawyer in your state.* ## Paidnice features in this article - [**Late fees and interest** Adds late fees and interest to overdue invoices when you turn them on.](https://www.paidnice.com/late-fees) ## About the editorial team Written by Denym Bird Co-founder & CEO of Paidnice Denym started Paidnice in 2022 after customers paying late left his own business short on payroll. He has led it to $1 billion collected on time across more than 1 million invoices, and writes about credit control, late fees and getting paid on Xero and QuickBooks. Reviewed by Ashley Schroder Co-founder of Paidnice Ashley is a co-founder and lead developer of Paidnice and has built accounting software for more than 10 years. He builds the ledger connections that put reminders, late fees and payments into Xero, QuickBooks and ERPs such as NetSuite and Business Central. Before Paidnice he co-founded A2X, ecommerce accounting software for Xero and QuickBooks. ### Try Our Free Accounts Receivable Calculators Optimize your cash flow with our suite of financial tools designed for AR professionals. Calculate DSO, aging analysis, late fees, and more. Explore Calculators ## Start getting paid on time with Paidnice Connect Xero or QuickBooks and Paidnice prepares draft policies for you. Nothing runs until you approve them. Try it FreeBook a Demo [Rated 5 stars, 160+ reviews](https://www.paidnice.com/reviews) · [App of the Year](https://www.paidnice.com/blog/winner-xero-global-app-awards-2026)