Late fee: definition, example, and why it matters

Most US trades charge 1.5% per month (18% APR) on balances past due. Legal in every state if disclosed on the invoice or contract before the work. Glo Invoice can apply late fees automatically after a grace period.

• Short definition. A penalty added to past-due invoices to encourage on-time payment.
• Category. Late fee is a payments term used by service businesses when billing customers.
• How Glo Invoice handles it. Glo Invoice builds late fee into the invoice itself, so you don't track it on paper or in a spreadsheet.

Frequently asked questions

What does late fee mean?

Most US trades charge 1.5% per month (18% APR) on balances past due. Legal in every state if disclosed on the invoice or contract before the work. Glo Invoice can apply late fees automatically after a grace period.

Related terms

• Past due — An invoice still unpaid after its due date.
• Net 30 — Payment terms requiring full payment within 30 days of the invoice date.