Can I charge a late fee on an overdue invoice?

Only if the right to charge it was agreed before the work — in your contract, your terms of business, or on the invoice itself — and in some jurisdictions statute provides for it regardless. What you cannot do is invent a rate after the fact and expect it to stick. Check what your own paperwork actually says before you cite a figure in an email, because a customer who finds the term is not there will use it to reopen the whole conversation.

Does charging interest damage the relationship?

Applying a term that was agreed, after two ignored reminders, with notice and a date, rarely does. Springing a fee with no warning usually does. The difference is not the money, it is whether the customer could have seen it coming — which is exactly what this email exists to guarantee.

Overdue invoice email that states your payment terms and late fee

The first email in the sequence with a consequence in it. It states what was agreed rather than announcing a new penalty.

Two weeks overdue
Firm tone
They promised and missed the date

The email

Subject

Invoice [Invoice number] — 14 days overdue, terms attached

Body

Hi [Customer name],

Invoice [Invoice number] for [Amount] was due on [Due date] and is now fourteen days overdue. Two earlier reminders have gone unanswered.

Our agreed terms are [Payment terms], and they provide for interest of [Late fee rate] on overdue balances. I have not applied it and would rather not, but from [Date] I will start doing so on this invoice.

To settle it now, the payment details are on the attached copy. If there is a reason it is unpaid that I do not know about, tell me before [Date] and we will deal with that instead.

Regards,
[Your name]
[Your business]

Fill in before you send

[Customer name]
[Invoice number]
[Amount]
[Due date]
[Payment terms]
[Late fee rate]
[Date]
[Your name]
[Your business]

When to send this

Two weeks past due, when two reminders have been ignored and your written terms actually provide for interest.
When you intend to apply the fee if the date passes — the email only works if the next one follows through.
To a business customer who can be expected to understand a terms reference without taking it personally.

When not to send this

The wrong reminder at the wrong moment costs more than no reminder at all.

When your terms, your contract or your invoice template say nothing about interest on late payment.: Instead: Cut the fee sentence and keep the rest. Announcing a rate you never agreed is not enforceable and invites a reply arguing about the fee instead of paying the invoice — which is a much worse conversation than the one you were having.
When you know you will never actually charge the interest.: Instead: Use the neutral two-week email that asks who handles payments. An unenforced threat teaches the customer that your escalations are decorative, and the next one you send will be read that way too.
To a long-standing customer who has hit a genuine cash problem and told you so.: Instead: Use the payment plan email. Adding interest to someone who cannot pay the principal does not accelerate anything; it adds a number they will dispute later and gives them a reason to deal with a different supplier first.

Not certain this is the reply you got?

This template assumes they promised and missed the date. Replies rarely say so in those words, and picking the wrong one is how a dispute gets chased or a kept promise gets nagged. Paste what they actually sent and the decoder will tell you which situation it is — and therefore which email belongs here.

Decode the reply you were sent

Notes on this one

Notice the fee is framed as something already agreed that you have been declining to apply, not as a new punishment. That is both more accurate and much harder to argue with: you are not raising the stakes, you are telling them you are about to stop absorbing a cost you agreed not to.

Give a date. 'Interest may be applied' invites nothing, because nothing has to happen by any particular time. A date creates a deadline the reader can act on, and it is the reason this email gets replies the previous two did not.

Questions this comes with

Can I charge a late fee on an overdue invoice?: Only if the right to charge it was agreed before the work — in your contract, your terms of business, or on the invoice itself — and in some jurisdictions statute provides for it regardless. What you cannot do is invent a rate after the fact and expect it to stick. Check what your own paperwork actually says before you cite a figure in an email, because a customer who finds the term is not there will use it to reopen the whole conversation.
Does charging interest damage the relationship?: Applying a term that was agreed, after two ignored reminders, with notice and a date, rarely does. Springing a fee with no warning usually does. The difference is not the money, it is whether the customer could have seen it coming — which is exactly what this email exists to guarantee.

All 19 reminder templates

Collectly does this across every invoice, on its own

You just picked the email to send on one invoice. Collectly does the same thing continuously for every unpaid invoice you have — reads the replies, works out why each one is unpaid, estimates when it will land, and drafts the follow-up for you to approve.

With 15 rules it cannot talk its way around

A paid or written-off invoice is never chased again. Follow-ups are switched off permanently, not deferred.
A disputed invoice stops automated chasing entirely and goes to a person to resolve.
A promise to pay on a date pauses reminders until that date has passed. Collectly checks back the day after, not on the day.
At least three days between reminders on the same invoice, so re-running the analysis cannot turn into nagging. A resent or corrected invoice the customer has just asked for is not a reminder, and still waits for your approval.

Try it on your invoices See how it works

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