Late Payment Law in Canada

What you're legally owed

When a B2B invoice goes unpaid in Canada, the governing statute is Provincial courts' Justice Acts + Federal Prompt Payment for Construction Work Act 2023 (construction only). It gives freelancers and small suppliers automatic rights to statutory interest and a flat compensation fee on every overdue invoice — no contract clause required.

Statutory interest

Provincial pre-judgment interest rate (typically bank rate + prescribed amount) or contractual

~5–7% statutory pre-judgment; contractual typically 12–18%

Flat compensation fee

Contractual (not statutory)

late fee (contractual)

Default payment term

Contractual; 28 days under federal/Ontario prompt payment for construction

Public sector max

28 days (federal construction contracts)

These amounts accrue automatically from the day after the invoice due date. You do not need a contract clause to invoke them — the statute creates the right directly. A contract can set a higher rate, but not a lower one.

How to enforce it in Canada

The primary enforcement path for freelancers in Canada is the Provincial small claims court.

Limits and procedures vary by province: Ontario up to $35,000, British Columbia up to $35,000 via the Civil Resolution Tribunal for debt claims, Alberta up to $100,000. Filing fees are modest ($100–$250) and lawyers are optional.

Small claims limit: Varies by province — Ontario $35,000, Alberta $100,000, BC $35,000.

Official portal: www.justice.gc.ca

What to do this week

1. Add a late-fee clause citing Provincial Courts of Justice Act / FPPCWA to your contract template. Use the freelance contract template as a starting point.
2. Add one line to your invoice footer: “Late payments accrue interest under Provincial Courts of Justice Act / FPPCWA at Provincial pre-judgment interest rate (typically bank rate + prescribed amount) or contractual, plus a Contractual (not statutory) late fee (contractual).”
3. When an invoice goes overdue, use the free late-fee calculator to get the exact amount owed, then send a formal demand letter citing the statute. The demand letter guide walks through exactly what to include and what to leave out.
4. If the letter's deadline passes, run the escalation playbook — or file directly via the Provincial small claims court, which is designed to be used without a lawyer for undisputed debts.

One thing most freelancers don't know

Alberta's small claims limit ($100,000) is the highest in Canada by a wide margin — a single freelancer can recover very large B2B debts without engaging a lawyer.