Policies
5 min read
Late fees: how to set one and word the clause
Which late fee rates are common, why the clause belongs in your contract before the first invoice, and the wording that works.
Ben Adeyemi
Check the rules where your client is
Late fees are allowed in most US states, but some cap the rate and some require the fee to be agreed in writing before the work starts. If you invoice clients in other states or countries, check the rules where they are, or ask your accountant. Dunwell doesn’t give legal advice. It adds the fee you set.
Common rates
Among Dunwell accounts that charge late fees, a monthly rate between 1% and 1.5% of the overdue balance is the most common. A flat fee of $25 to $50 is simpler for small invoices. Pick one, put it in writing and apply it the same way to every client.
Put it in the contract and on the invoice
A fee that appears for the first time on an overdue invoice feels like a penalty. The same fee in your contract and in small print on every invoice reads as a policy. An example clause: “Invoices are due 14 days from the invoice date. Balances unpaid after 30 days incur a late fee of 1.5% per month.”
Mention it once
Dunwell only mentions the fee in the final reminder, 14 days after the due date by default, so earlier reminders stay friendly. You can waive a fee from the invoice page in one click, which is a good gesture for a client who has always paid on time before.
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Import your clients and open invoices from QuickBooks, Xero or FreshBooks. Reminders start on the schedule you pick, and you can pause any client with one click.