No Late-Payment Interest in Your Contract? It’s Free Money for Them
If the contract never says what happens when payment is late, waiting 90 days costs the client nothing — small-claims escalation becomes your only tool. Add a late-fee clause: 1.5% per month, or the maximum allowed by state law, whichever is lower.
Why this clause bites
Missing entirely: any cost to the client for paying late. Without a stated late fee, waiting 90 days costs them nothing — and small-claims escalation is your only tool. Keep any interest rate modest so it stays enforceable under state usury limits.
How to spot the gap
This one is a missing clause, not a dangerous one — the contract sets terms but never says what happens if they are broken. Typical contract language looks like this:
(The contract sets a payment date, but says nothing about what happens if that date passes.)
Add: "Overdue balances accrue a late charge of 1.5% per month (18% APR), or the maximum rate permitted by applicable state law, whichever is lower."
Written to be forwarded to the client directly — polite, professional, and sourced (see below).
Questions freelancers ask
Is an 18% APR late fee enforceable?
State usury limits vary. The standard "safe" formulation is a modest monthly rate or the maximum permitted by applicable state law, whichever is lower — that keeps the clause enforceable across states.
Can you charge late fees without a clause?
Generally much harder — without a contractual rate you have no agreed number to point to, and you fall back on statutory interest, which is often small. The clause is the tool.
Source reference: Nolo — Small claims & late payment; state usury limit references
Every finding in a ContractShield report cites the same public resource this guide is based on — verify it yourself before you act on it.
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Educational content only — not legal advice, and it creates no attorney–client relationship. For anything material to you, consult a licensed attorney in your state.