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Late Payment and Debt Recovery Clause

Stop chasing overdue invoices with vague reminders and no real leverage. This two-part template gives you both the prevention and the cure: a drop-in clause to add to your existing service agreements so clients agree to the consequences of late payment upfront, and a formal demand letter ready to send when a friendly reminder hasn’t worked.

What’s included:

  • Part 1 — Drop-In Clause: Four ready-to-insert sub-clauses covering payment terms, interest on overdue amounts, your right to suspend work until payment is received, and recovery of costs if formal action becomes necessary
  • Part 2 (BONUS) — Formal Demand Letter: A complete, ready-to-send letter referencing the overdue invoice, accrued interest, a clear payment deadline, and the next steps if payment still isn’t made
  • Step-by-step “How to Use This Agreement” instructions, so you know exactly when and how to use each part
  • Clearly marked placeholders for your business details, interest rate, payment terms, and invoice specifics

Best for: Adding real teeth to your existing Service Agreement or Independent Contractor Agreement, and having a professional, ready-to-go letter on hand the moment an informal reminder doesn’t get results.

General information only. Not a substitute for tailored legal advice.