Late fee / interest clause
The contract line that charges a client for paying late, usually a percentage per month on the balance once the invoice goes overdue.
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What it is
A late fee or interest clause is the contract line that puts a price on paying you late: typically a flat fee, or interest accruing on the overdue balance from the day after the due date (1 to 1.5 percent per month is the common freelance figure). The signed agreement is what creates the obligation. Restating it on every invoice next to the due date does not create the right, it removes the 'nobody told me' reply, so let 'Net 30' and the charge travel together as a matter of clear notice.
Its real job is not revenue, it is queue position. A client paying six suppliers this week pays the ones with a consequence first. Pair the clause with a stop-work clause and it gets sharper still: interest accrues, and delivery pauses at day 15 overdue until the balance clears. Dunning reminders do the chasing; the clause is what the reminders can point at.
Two cautions. Enforceability varies by jurisdiction, and rates seen as punitive rather than compensatory can be struck out, so check local rules (some places, like the UK and EU, give statutory late-payment interest even without a clause). And enforcement is discretionary: most freelancers waive the fee for a good client who apologises, which is fine, because the deterrent already worked. Charging it silently on a first offence buys you a fight and loses the account. This is not legal advice; have a local lawyer sanity-check the wording.
Ask AI for it
Draft a late payment clause for a freelance services contract in [jurisdiction]. Set the late charge at the lower of [desired rate] per month and the maximum rate that jurisdiction allows, and say so in the clause itself. Do not stack interest, a flat administration fee, and compounding together unless each one is separately permitted there and they are not compensating the same delay twice; where you are unsure, include only the interest and note the others as options to check. Cover: payment terms (Net [30] from invoice date), when the charge starts accruing, the right to suspend work while any invoice is more than [15] days overdue, recovery of reasonable collection and legal costs if recoverable there, and whether unpaid amounts delay the transfer of IP. Write it as two or three numbered clauses in plain English, avoid punitive-sounding language so it reads as compensation for delay, put square brackets around every term whose legality or ceiling depends on the jurisdiction, and finish with a short list of exactly those bracketed items for a local lawyer to verify.