Rant: My lawyer said to always put late fees in the contract

I hired a lawyer to write my service agreement last year and she insisted on a 5% monthly late fee clause. I thought it was too harsh and almost took it out. Just had a client from Tampa who was 60 days late on a $2,500 invoice. The late fee got their attention and they paid the full amount within 24 hours of my final notice. Has anyone else had a late fee actually work like that?

4 comments

4 Comments

shane_carter2mo ago

From my view, it sets the right tone from day one. A clear late fee in the contract isn't about being harsh, it's about being clear. It turns a personal conflict into a simple business rule. Good clients who plan to pay on time won't even notice it's there. It only becomes a problem for the ones who were going to be a problem anyway.

ryan_hart382mo ago

I mean it also filters out clients who don't respect your time from the start.

the_julia2mo ago

Actually @ryan_hart38, it can also scare off good clients who just have tight budgets.

lee.cora18d ago

Actually you bring up a good point about scaring off clients. But gentle correction there - a late fee that's reasonable like 5% monthly might actually help good clients with tight budgets too. It shows you're serious about terms without being predatory. Plenty of small businesses run lean and a clear policy lets them plan ahead instead of guessing what happens if they slip. The ones who walk over a simple late fee are usually the ones who'd haggle on 20 other things later anyway.