Can you charge late payment fees or interest in Australia?
In Australia you can generally charge interest or a late fee on an overdue invoice if the customer agreed to it in your terms before the work was done. The fee should be reasonable and reflect your actual costs. Without agreed terms, interest usually only comes into play through a court claim.
Put it in your terms first
Late fees and interest need to be agreed up front, in your quote, contract or terms of trade. Adding them to an invoice after the fact usually isn't enforceable.
Keep it reasonable
Australian consumer law protects against unfair contract terms, including for small businesses. A fee that's out of proportion to your actual loss risks being treated as a penalty. Many businesses use a simple annual interest rate on the overdue amount.
How to calculate interest
Interest = amount owing × annual rate × days overdue ÷ 365. For example, $5,000 at 10% a year, 30 days overdue, is about $41. Use our free calculator to work it out.
Should you actually charge it?
Often the threat matters more than the money. Many businesses mention it in terms and waive it for customers who pay promptly once reminded.
Get advice for your situation
This is general information, not legal advice. Building and construction work has its own rules under each state's security of payment laws.
Sources
Last checked 6 November 2026.
Questions people ask
- Can I charge interest on an overdue invoice?
- Generally yes, if the customer agreed to it in your terms before the work was done, and the amount is reasonable.
- What if my terms don't mention interest?
- Without agreed terms, interest usually only comes into play through a court claim.