Can I Charge for Time Chasing Payment?

It comes down to your terms

Whether you can add interest or fees for chasing a late payer depends almost entirely on what your customer actually agreed to in advance. If your terms or contract include a clear late-payment clause, you generally have a solid basis to charge; if they say nothing on the subject, trying to add charges after the invoice has already gone overdue is far harder to justify and far easier for the customer to refuse.

This is precisely why the real work happens long before the invoice is even late. A short, clear clause in your standard terms — covering interest and reasonable recovery costs on overdue accounts — is what gives any later charges genuine teeth. Without that groundwork, late-payment charges tend to be more of a bargaining position than an enforceable entitlement, so set the foundation up front rather than scrambling for justification once an account has already slipped into arrears.

Write the clause in advance

To put yourself in a position to charge for late payment, set it out plainly at the point you engage the customer, not buried somewhere they will never read. A workable late-payment clause typically covers a few specific points so there is no ambiguity later:

• Interest at a stated rate on overdue amounts.
• That reasonable recovery or collection costs may be added.
• Exactly when the charges begin to accrue.

Crucially, make sure the customer actually receives and accepts these terms before work begins — terms that were never properly sent, or were hidden in fine print, carry very little weight if you later try to rely on them. Clarity and genuine agreement up front are what prevent arguments down the line. A clause the customer demonstrably signed up to is worth far more than one you simply assumed applied.

Keep interest reasonable

Where your terms do allow interest, calculate it fairly and transparently rather than treating it as a profit centre. A common and defensible approach is a modest percentage applied to the outstanding amount, accruing from the original due date. Show your working clearly on the statement so the customer can see exactly how the figure was arrived at, which heads off arguments about the charge itself.

Resist any temptation to pile on punitive or inflated charges. Excessive, unclear or aggressive interest can be challenged, may prove difficult to enforce, and can poison an otherwise recoverable relationship that might have continued profitably once the debt was cleared. The real goal of late-payment interest is to encourage prompt payment and fairly cover your cost of being kept waiting, not to punish the customer or to profit from their lateness. Keep it proportionate and it stays both enforceable and credible.

Recovery costs and escalation

A well-drafted clause can also entitle you to recover reasonable collection costs when a debt is escalated beyond your own reminders. This matters most at the point you move to professional recovery, because the ability to add recoverable costs can help offset the commission on a successful collection, improving your net position on the debt.

If a debt does reach that stage, our specialists can advise on what is realistically recoverable in your particular situation, since this varies with the wording of your terms and the circumstances of the debt. You can refer the debt to Merion on a commission-only basis and discuss the recoverable-costs position as part of that. This is general information to help you frame your terms, not legal advice, so take proper advice before relying on a clause for significant sums.