Texas Late Fee Calculator for Invoices: What You Can Legally Charge (Plain-English Guide)

You've got an overdue invoice from a Texas client and you want two things: the actual dollar amount you can add to it, and confidence that the number won't blow up in your face legally. This is a Texas late fee calculator for invoices in article form — the formula, the rates Texas law actually allows, and worked examples you can copy.

If you'd rather skip the math, our late fee calculator does it for you — enter the invoice amount, due date, and rate, and it spits out the fee. This post covers the Texas-specific part: which rate you're allowed to enter.

Quick disclaimer: I'm not a lawyer and this isn't legal advice. It's a plain-English summary of the statutes so you know what questions to ask.

The 30-second answer

Which rate applies depends entirely on one question: did your contract say anything about late fees?

• Contract is silent: Texas Finance Code § 302.002 lets you charge 6% per year, starting on the 30th day after the amount was due. Not the due date — 30 days after it.
• Contract specifies a rate: you can charge what you agreed to, up to Texas's usury ceiling. For most commercial invoices, the practical safe maximum is 18% per year (1.5% per month).
• Government client: the Texas Prompt Payment Act sets its own rate (more below).
• Private construction project: Texas Property Code Chapter 28 gives you 1.5% per month on overdue payments.

Now the details, because the details are where people get burned.

How to calculate a Texas late fee on an invoice

The formula for interest-based late fees is simple:

Invoice amount × annual rate ÷ 365 × days overdue = late fee

Worked example. Say you invoiced a Dallas client $4,000, your contract says 1.5% per month (18% per year), and they're 45 days past due:

• $4,000 × 0.18 = $720 per year in interest
• $720 ÷ 365 = $1.97 per day
• $1.97 × 45 days = $88.77

Same invoice, but your contract never mentioned late fees? You're on the 6% statutory rate, and the clock doesn't start until day 30 past due. So at 45 days overdue, only 15 days count:

• $4,000 × 0.06 ÷ 365 = $0.66 per day
• $0.66 × 15 days = $9.86

That gap — $88.77 vs. $9.86 on the same invoice — is the entire argument for putting a late fee clause in your contract before the work starts.

The Texas late payment interest rate on invoices, scenario by scenario

Your contract is silent: 6% after 30 days

Texas Finance Code § 302.002 is the fallback. If you never agreed on interest with the client, you can still charge 6% per year — but only starting on the 30th day after the amount came due. It's not much, but it's something, and you don't need the client's permission to apply it. The statute grants it.

Your contract names a rate: up to 18% is the safe zone

If your contract or signed terms specify a late fee rate, Texas will generally enforce it — up to the usury limit. Texas usury law (Finance Code Chapters 302 and 303) is genuinely scary: charge more than the legal maximum and the penalties can include forfeiting three times the excessive interest, and in bad cases the entire principal.

The ceilings in Chapter 303 float with market rates, but for commercial transactions the widely used safe harbor is 18% per year, which is why you see "1.5% per month" in so many Texas contracts. It's the highest rate most attorneys will bless without a second look. If you're tempted to go higher, that's the point where you actually talk to a lawyer.

Flat late fees: fine, but don't get cute

A flat fee — "$25 if payment is more than 10 days late" — is common and generally enforceable in a commercial contract if it's a reasonable estimate of what the delay costs you, not a punishment. Two cautions:

• Texas courts can recharacterize a big flat fee as disguised interest. A $500 flat fee on a $1,000 invoice that's a week late looks a lot like a 2,600% annual rate, and now you're in usury territory.
• Flat fees, like interest, need to be agreed to before the invoice. You can't add a fee retroactively just by printing it on the overdue notice.

Keep flat fees small relative to the invoice, or just use the 1.5%-per-month structure and skip the ambiguity.

Texas Prompt Payment Act interest: when your client is the government

If your client is a Texas state agency, city, county, or school district, the Texas Prompt Payment Act (Government Code Chapter 2251) takes over — and it's actually good news for you.

• Payment is due 31 days after the entity receives your invoice (or the goods/services, whichever is later).
• Overdue payments automatically accrue interest — you don't have to invoice for it, negotiate it, or even ask. The statute says the entity shall pay it.
• The rate is the prime rate published in the Wall Street Journal on July 1 of the preceding state fiscal year, plus 1%. With prime in the 7–8% range recently, that works out to roughly 8–9% per year — check the current prime rate for the exact figure.

There's a parallel regime for private construction: Texas Property Code Chapter 28 requires owners to pay contractors within 35 days of a written invoice, and overdue amounts accrue interest at 1.5% per month. If you're a contractor or sub, that's your number even if the contract is silent.

What to actually put in your contract

The whole Texas framework rewards people who set terms upfront. Three lines in your contract or terms of service get you from the weak 6%-after-30-days default to the full 18%:

Invoices are due within [15/30] days of the invoice date. Overdue balances accrue a late fee of 1.5% per month (18% per annum) from the due date until paid. Partial payments are applied to fees first, then principal.

Put the same language on every invoice as a reminder, but the contract is what makes it enforceable. If you want a fuller version with the surrounding policy — grace periods, when you pause work, how you communicate the fee — grab our late payment policy template and adapt it.

And before you set your due date, sanity-check your terms: if you're giving net 30 to clients who reliably pay at day 50, the net terms calculator will show you what that float is actually costing you.

Running the numbers on your invoice

So, to use any Texas late fee calculator for invoices correctly, you need three inputs: the invoice amount, the number of days overdue (minus 30 if you're on the statutory default), and the right rate — 6% with no agreement, up to 18% with one, prime-plus-1% for government clients, or 1.5% per month for construction. Plug those in and the fee is just arithmetic.

The harder part is consistency. A late fee you calculate once and never mention again is a bluff; a fee that shows up on every reminder, growing a little each week, changes how fast clients pay. Automated payment reminder tools can recalculate the fee and include it in every follow-up so you never have to do this math by hand again.