How to Charge Late Fees on Invoices

Late fees work best as a deterrent: clearly stated up front, rarely charged. Here's what you are allowed to charge in the EU, the UK and the US, and how to word it on your invoice.

EU: Late Payment Directive

Directive 2011/7/EU covers business-to-business and business-to-government payments. If you're paid late, you can generally claim:

Interest at the ECB reference rate plus at least 8 percentage points, unless your contract sets a different rate
A fixed €40 for recovery costs per late invoice, plus reasonable further costs

Agreed payment terms between businesses shouldn't exceed 60 days unless expressly agreed and not grossly unfair to you. Public authorities generally have to pay within 30 days. If no term is agreed, interest usually runs from 30 days after receipt of the invoice. Each country implements the directive in national law.

UK: Late Payment of Commercial Debts Act

For B2B debts, you can claim statutory interest of 8% plus the Bank of England base rate, plus a fixed sum of £40 (debts under £1,000), £70 (£1,000 to £9,999.99) or £100 (£10,000 or more). If your contract sets a different interest rate, that rate applies instead. Example: on £2,000 with a 4% base rate, interest is 12% a year, so about 66p a day.

US: contractual late fees

There is no federal statutory late fee. You can charge one if it's in your contract or accepted terms, typically a flat fee or 1–1.5% per month. State usury and consumer laws cap what's allowed, especially for consumers, so check your state's rules.

Consumers

The EU and UK statutory rules above apply to business clients only. For consumer clients, you can only charge late fees that were clearly agreed in advance and that are fair under consumer law.

Wording for your invoice

Payment due within 30 days (by 18 Nov 2026).
Late payments incur statutory interest and a fixed
compensation fee under [Directive 2011/7/EU / the Late
Payment of Commercial Debts (Interest) Act 1998].

For US clients: "A late fee of 1.5% per month applies to balances unpaid after the due date." Add your terms in the notes field of the generator; when you do charge interest, send a new invoice for it rather than changing the original.

Official sources

Checked against these sources in October 2026. Rules and rates change, so confirm with the tax authority or an adviser before relying on them. General information, not legal or tax advice.

FAQ

Can I charge a late fee if it's not in my contract?

In the EU and UK, statutory interest and fixed recovery costs apply to late B2B payments even without a clause. In the US, you generally need an agreed late fee in your contract or terms.

How much is the EU late payment compensation?

At least €40 per late invoice for recovery costs, plus statutory interest of at least 8 percentage points above the ECB reference rate.

Should I add late fees to the original invoice?

No. Leave the original invoice unchanged and send a separate invoice for the interest and fees.

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