To help encourage your clients to pay on time, you can add a late fee to your smart file contract. Late fees will be assessed after 30 days have passed since a payment was due, and are added on to the total payment amount due. HoneyBook’s late fees do not compound, so your clients will never accrue late fees on their late fees.
Late fees are not available for legacy files. If you're using legacy files and want to include late fees in your contracts and invoices, you'll need to add smart files to your account.
Add a late fee notice to a contract
Late fees should only be added if your contract with the client includes a late fee stipulation—the fee may not be legally required if you do not perform this step. A default legal note is supplied below—you should consult with a legal professional if you have further questions about your unique situation.
1. When creating a contract, include in your terms that a late fee can be assessed for nonpayment. Include what late fee percentage you want to use.
a. A best practice is to add this notice to your contract templates so you know it’s always included.
b. Make sure to use the late fee smart field when you add this contract note to your templates so you don't have to update the fee amount for every unique contract. You'll want to replace the {{late fee smart field}} text in the note with this smart field.
Unless otherwise agreed, all fees shall be due and payable by the due date set forth on the invoice. Invoiced amounts not paid by their due date may be subject to a monthly "late charge" of {{late fee smart field}}% interest fee at an amount not to the maximum amount permitted by applicable law.
Add a late fee to an invoice
Once you’ve added the legal note to your contract, you’ll need to actually turn on the late fee.
1. When setting the payment options for your invoice, toggle on Client will get a late fee.
2. Enter the percent amount the late fee should be. This percentage is based on the payment value.
a. Late fees are capped at 10%.
The late fee can now be assessed after 30 days have passed after payment was due.
✅ Note
You can also turn late fees off for a specific invoice if you used a smart file template where late fees were toggled on.
How late fees appear for your client
When a late fee is added to your client’s payment, they’ll receive a notification and can view the late fee amount when they go to make a payment.
The late fee will appear as a dollar amount, and is already added to the payment total they’ll see.
HoneyBook will also generate a fresh invoice with the late fee added so your client isn’t surprised by the additional cost.
Send payment reminders and cancel late fees
Reminding clients to pay will help them pay on time so you won’t have to assess a late fee. You can use automatic payment reminders, as well as send reminders manually through your Payments screen, which is shown below. Automatic reminders are a setting that can be toggled on and off, so check that yours are turned on.
HoneyBook will send a text message reminder to your client on the day the payment is due, but you can also manually send a reminder.
Also, you can cancel a late fee for payments at any time from the Payments screen (as well as see the late fee dollar amount for that late payment).
1. While reviewing all your payments, select the specific overdue payment you want to review.
2. From here, send a reminder to pay or cancel the late fee.
a. Select Remind to send an email and mobile reminder to your client to pay the invoice.
b. Select Cancel late fee to remove the late fee from the overdue payment.
📣 Note
Your clients won’t receive these emails if your automatic payment reminders aren’t turned on. Learn how to adjust your automatic payment reminders.
📚 Tip
You can also view the late fee that was added to the payment total from your invoice's action summary.
FAQs
Are late fees legal?
Are late fees legal?
HoneyBook is not legal counsel, so you should discuss your unique situation with your legal counsel to determine if the late fees you want to use are legal. That being said, as long as you include in your contract that a late fee can be assessed for non-payment and the amount is reasonable, then late fees should be legal. This is why you should add a late fee stipulation to all of your contract templates and HoneyBook caps the late fee amount at 10%.
How will charging late fees help me?
How will charging late fees help me?
When your clients are aware that they can be penalized with a late fee, they’re more likely to pay on time. This directly saves you time and helps your cash flow become more consistent since you won’t have to chase them down for payment as often.
What are some late fee best practices?
What are some late fee best practices?
Never forgive late fees in exchange for payment of the original invoice amount. Your clients signed up to make these payments on time when they signed the contract, and clients should be ready to pay their invoice in full in exchange for your work.
Be fair and timely with your payment reminders. You’re much more likely to get paid on time with some gentle reminders, and will likely not need to pursue the payment in court after a late fee is assessed if you simply remind the client to pay.
Do not punish your clients with a late fee. These are meant to help your clients remember to pay on time, and are likely not going to be a meaningful addition to your cash flow (when compared to your actual service costs).
Are there any special payment collection rules for New York City?
Are there any special payment collection rules for New York City?
If your client lives in New York City and hasn’t yet paid by the contract due date, you can include their invoice in a formal complaint with New York City’s Office of Labor Policy and Standards. If you want to pursue this route for collections, you’ll want to discuss the Freelance Isn’t Free Act with your legal counsel.
What if I just can’t get the client to pay?
What if I just can’t get the client to pay?
If all else fails, you’ll want to consider reaching out to a debt collection agency or pursuing legal action to get your payment. If you want to go these routes, you’ll definitely want to consult with your legal counsel.
Still have questions? Feel free to send us a message by clicking the Question Mark icon on any HoneyBook page. Our team is always happy to help!