How much interest can I charge on overdue invoices in Canada?

Is it legal to charge late fees in Canada? Yes, businesses in Canada can charge late fees on overdue invoices either as a fixed penalty fee or by adding interest at the average bank rate plus 3%. As the business charging a late fee, the onus is on you to ensure that the amount is “reasonable”.

How much can I charge a customer for late payment?

Your late fees should also be fair. In most cases, they are expressed as a small percentage of the invoice total (less than 10%), but you are also able to charge a fixed amount as an administrative fee.

How much should I charge for late invoices?

Late fees usually range from 1% to 2% monthly interest rate, so staying near that range is the most reasonable approach.

Can you legally charge interest on overdue invoices?

Because the government doesn't regulate a business' late payment fee, you can, in theory, charge whatever payment interest rate you see fit. However, small companies tend to charge a late transaction payment interest rate of 1.5%, while larger enterprises charge 2.5% and up.

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