Late Fee

What is a late fee?

A late fee is a charge a seller adds to an invoice when the customer pays after the due date, as a flat amount, a percentage or interest. It is also called a late payment fee or a late charge.

A late fee is separate from the invoice total and starts only after the due date, or after a grace period if the seller offers one. Interest that grows each day an invoice stays unpaid is one form of it. A flat fee on each overdue invoice is another.

Rules on what a seller can charge depend on the country and, in the US, on the state. A fee is usually enforceable only when it is stated in the contract or terms the customer accepted, or set by statute. Check the rules where you trade before you add one.