Glossary
Late payment clause
A contract provision specifying the consequences of a client paying after the agreed due date, such as interest charges, late fees, or suspension of work.
A contract provision specifying the consequences of a client paying after the agreed due date, such as interest charges, late fees, or suspension of work.
Example
A contract's late payment clause charges 1.5% monthly interest on invoices unpaid after 30 days, and allows the agency to pause active work until the balance is settled.
Why it matters for agencies
A late payment clause with real teeth (interest, work suspension) gives an agency leverage that a polite reminder email doesn't. This matters especially for disputed change-order invoices, where a client might otherwise just let the balance sit unpaid indefinitely while the disagreement drags on.