> For the complete documentation index, see [llms.txt](https://learn.withessential.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://learn.withessential.com/administration/settings/set-up-automatic-late-fees.md).

# Set up automatic late fees

Automatic late fees add a percentage fee to an invoice that stays unpaid past its due date. You choose the percentage and how many days past due an invoice must be, and Essential assesses the fee for you each night. Each invoice is charged once, the fee is added to its balance due, and the customer sees it on the invoice and the pay page.

## Before you start

* Invoicing is turned on for your business. See [Turn invoicing on or off](/administration/settings/turn-invoicing-on-or-off.md).
* Your role can set up invoicing integrations (the same permission that manages processing fees). If you can't see the Payments section, contact your business's administrator.
* Your invoices have payment terms, since the due date is the invoice date plus its terms. A due-on-receipt invoice is due on its invoice date. See [Set customer billing](/customers-and-work/customers/set-a-customers-billing-profile-payment-terms-tax-exempt-autopay.md).

## Turn on late fees

1. Open **Settings → Invoicing** and select the **Payments** tab.
2. In the **Late Fees** card, turn on **Charge late fees automatically**.
3. Enter the **Late fee** as a percentage, for example `5` for 5%. It must be above 0 and at most 100.
4. Enter **Days past due** — how many days after the due date an invoice can go unpaid before the fee is assessed. `0` assesses the fee the night after the due date; `30` gives customers a 30-day grace period. For example, a Net 30 invoice with 30 days past due is charged on day 61 after the invoice date.
5. Select **Save**.

The card's settings apply only when you select **Save**; changing the switch or the fields on their own doesn't change anything yet.

## How the fee is assessed

Every night, Essential looks for invoices that are more than your **Days past due** past their due date and still have a balance. Each eligible invoice is charged once, even if it stays unpaid for months (a late fee can only be added again if you revert the invoice to Draft and send it again): the fee is your percentage of the invoice's remaining balance, including its sales tax. An invoice that is already paid, or that has been written off as bad debt, is never charged.

The fee is a separate line on the invoice, not a change to its services or totals: the original invoice items, discounts, and tax stay exactly as sent. The fee appears on the invoice page, the customer's pay page, and the invoice PDF, and it is included in the balance due everywhere a balance is shown or collected — including online payments, saved-card charges, and autopay. Payments settle the original invoice amount first and the late fee last.

Each assessment is recorded on the invoice timeline.

Nothing is charged retroactively. Only invoices that pass your **Days past due** mark *after* you turn the setting on are assessed; an invoice that was already past that mark when you enabled late fees is never charged automatically. The one exception is an invoice you revert to Draft and send again while late fees are on: the confirmation asks what a late fee should count from, and a late fee can follow from your answer. See [Late fees after you revert an invoice and send it again](/revenue/invoices/automatic-late-fees-on-overdue-invoices.md#late-fees-after-you-revert-an-invoice-and-send-it-again).

If you have customized your invoice document template, add the late fee rows to it so the fee prints on the PDF: the template variables are listed in Settings → Invoicing → Document templates under *Invoice*, as `late_fees` and `totals.late_fee`. The built-in templates already include them.

## Turning late fees off

Turn off **Charge late fees automatically** and select **Save** to stop future fees. Fees already added stay on their invoices until they are paid or waived; turning the setting off does not remove them. Turning it back on resumes nightly assessment with the percentage and days you saved.

## Exempt a customer, property, or invoice

While late fees are on, a **Do not charge late fees** option appears under **Billing options** when you edit Customer Billing or Property Billing. Check it and save, and every new invoice for that customer or property starts exempt from automatic late fees. The same precedence as payment terms applies: a property with its own Property Billing uses only that setting, and a property on Customer Billing follows the customer. Changing the setting doesn't change invoices that already exist.

You can also exempt a single invoice, or waive a fee that has already been added, from the invoice itself. See [Automatic late fees on overdue invoices](/revenue/invoices/automatic-late-fees-on-overdue-invoices.md).

## Accounting

Late fees post to the **Late Fee Income** account in **Settings → Accounting**. It is created for you and mapped to Revenue; remap it there if your chart of accounts keeps late fees elsewhere. Waiving an unpaid fee posts the exact reverse of its assessment.

> **Where to find it:** Settings → Invoicing → Payments, in the Late Fees card

## Related guides

* [Automatic late fees on overdue invoices](/revenue/invoices/automatic-late-fees-on-overdue-invoices.md)
* [Waive processing fees on an invoice](/revenue/invoices/waive-processing-fees-on-an-invoice.md)
* [Set processing fees and pass Stripe fees to customers](/administration/settings/set-a-minimum-charge-for-credit-card-fees.md)
* [Set customer billing (payment terms, tax exempt, autopay)](/customers-and-work/customers/set-a-customers-billing-profile-payment-terms-tax-exempt-autopay.md)
* [Use Customer Billing or set Property Billing](/customers-and-work/properties/property-billing-profile-the-customer-default-or-its-own.md)
* [Connect QuickBooks to sync accounting](/administration/settings/connect-quickbooks-to-sync-accounting.md)


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