Late Payment Law in United States

What you're legally owed

When a B2B invoice goes unpaid in United States, the governing statute is No federal statute for private B2B. State usury laws and contractual late fees.. 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

Contractual (typically 1–1.5% per month, up to state usury ceiling) or state statutory judgment rate

~12–18% per year via contract; 8–10% statutory default on judgments

Flat compensation fee

Contractual (typical: $25–$50)

late fee (contractual)

Default payment term

Contractual (no federal default); Net 30 is the industry norm

Public sector max

30 days under the federal Prompt Payment Act (government contracts only)

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 United States

The primary enforcement path for freelancers in United States is the State small claims court.

Every state has a small claims court with limits from $5,000 (Kentucky, Rhode Island) to $25,000 (Tennessee, Delaware). Typical filing fees are $30–$150. No lawyer required; hearings are informal and usually decided on a single day.

Small claims limit: Varies by state — California $12,500, NYC $10,000, Tennessee $25,000.

Official portal: www.uscourts.gov

What to do this week

1. Add a late-fee clause citing State law (varies) 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 State law (varies) at Contractual (typically 1–1.5% per month, up to state usury ceiling) or state statutory judgment rate, plus a Contractual (typical: $25–$50) 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 State small claims court, which is designed to be used without a lawyer for undisputed debts.

One thing most freelancers don't know

Unlike the EU and UK, the US has no federal late-payment statute for private B2B. Everything flows from the contract, which is why a properly drafted late-fee clause is non-negotiable for US freelancers.