Independent contractors (ICs) enjoy a unique level of professional freedom –– they’re their own bosses. They set their own hours, dress code, and vacation time, providing them flexibility and peace of mind.
But all these perks come at a cost. Freelancers take on additional human resources, billing, and accounting tasks, such as setting payment terms, drafting invoices, and paying taxes.
As a self-employed coach, you must develop a solid plan defining the number of days a client must clear the invoice payment (such as within seven days of seeking services) to maintain a regular income. But that’s not all. You also need to draft invoices for sticky circumstances, such as overdue fees, with the right procedures and security protocols.
If you ask clients to pay late fees, it’s important to be professional, meaning your email/message needs to be authoritative yet personal.
Learn how to design and word a late fee invoice to encourage clients to pay on time.
Why mention late fees on an invoice?
There could be a few reasons you don’t add a late fee section in your invoice:
- You like to organize your payment invoice in two parts and send the first invoice soon after the session (with a reminder one day before the due date) and the next one seven days after the due date, including late fees.
- You implicitly trust your clients.
- You have an airtight contract stipulating clients must pay by a particular day to avoid penalties.
If you’re an IC, you know chasing down payments is an awkward and unpleasant territory. But if you have a late fee policy, you’ll minimize the chasing and maximize prompt payments.
Including late fees on the initial invoice makes it more accessible for clients. It’s one thing to ask or insist that your clients pay by a specific due date. It’s another to establish clear penalties that discourage late payments. Just like you want to receive your payment on time, clients only want to pay the actual service cost and not waste money on additional fees.
Sure, you may work with a client who can’t pay on time, but typically, a late fee motivates clients to follow through. Dissuading clients from paying late means you rest easier — and maybe even receive early payments.
Writing late fee statements for your invoices
Choosing the correct verbiage for your late fee statement helps guarantee you receive payment on time and maintain a healthy working relationship with your clients. Keep your message clear, brief, and professional.
Need an example of invoice wording for immediate payment? You could try something simple: “Payment is due within 15 business days. Late payments are assessed X% interest per week.”
What to do if a client doesn’t pay on time
A late fee statement is an effective warning, but you still may need to remind a client about a past-due invoice. To draft a firm but respectful payment reminder to a client who’s missed the due date, use the following:
- Customized message: Start by thanking your customers for using your services. Address them by their name.
- Empathetic check-in: A client might be facing financial hardship, and you empathize with their situation — create a plan to accommodate them. Offer different payment options or provide payment information again.
- Formal language: While personalization is a nice touch, be direct when reiterating your payment terms and late fee statement. If you charge a percentage-based late fee, remind clients that the final balance increases daily, weekly, or monthly (whichever you prefer).
- Professional tone: Maintain respect and trust if you want productive future sessions. Avoid threatening your client or appearing desperate. Getting confrontational or emotional may hamper the healthy boundaries of your working relationship.
Below is an example email you could send to a client who’s late on payments:
Subject line: Payment Overdue
Thank you so much for using X coaching services. It’s my pleasure to be able to work with you.
I’m writing to inform you of an overdue payment (invoice attached). I wanted to check in and make sure you are aware of the payment or if you’d like to set up a payment plan.
Please bear in mind that I charge a late fee of X%, so I recommend paying as soon as possible to avoid additional fees.
Late-fee invoice must-haves
Whether your client asks for an updated invoice including their late fees or not, attach this document to the payment overdue email. Here’s what this modified invoice should include:
- The original invoice number
- An itemized list of your services and the fees incurred
- The total amount due (including late payment fees)
- The new payment due date (this can be “immediately”)
- A statement that reminds your client of upcoming additional late fees
Late fee FAQs
As you follow up, a few questions might arise. Here are answers to some common queries.
Are late payment fees legal?
Late fees are legal, but coaches should establish them in their contracts so clients don’t have grounds to refute these charges. Plus, it’s a great practice to keep your clients informed. No one likes surprises, and dropping late fees on clients without warning generates mistrust.
What is the standard late fee on an invoice?
Coaches can decide what works best for their clientele, though experts recommend 1.5%.
How can I calculate late fees on invoices?
Late fees aren’t typically cumulative, which means they should reflect a percentage of the original amount due, not a percentage of the original amount plus any accumulated late fees.
For example, if your late fee is 1.5% per week and the client initially owed $200, you’d add $3 per week.
Securely send invoices and receive payment with Practice
Invoicing and billing don’t have to be a hassle. Make your payment process easier using a customer relationship management (CRM) support tool.
Practice’s CRM allows you to securely send your clients messages and documents, such as invoices, and receive dues. Save a late payment policy template, fill in the blanks, and send it to clients as needed. Not only does this system make your life easier, but it also helps your clients. They are less likely to miss an invoice if you localize messaging, billing, and charging in one easy-to-use place. Try it today.