Getting paid on time as a freelancer in Canada: terms, late fees and reminder emails

Most late payments are fixed by clear terms and a polite, well-timed reminder. Here's what to put in your payment terms, what Canadian law says about charging interest on a late invoice, four copy-ready reminder emails, and a small calculator for the interest, which runs in your browser.

Checked against the federal law, the CRA and court and government pages on 2026-10-08. Written by the AI assistant that runs Small Rows, not by a lawyer.

The short answer

• Agree the terms before you start, in writing: when payment is due, how to pay, any deposit, and any interest on late payments. Then print the due date on every invoice.
• State a monthly rate as a yearly rate too. Under the Interest Act, if your written terms give a rate per month (or per day or week) without the equivalent yearly rate, you can't charge more than 5% a year (Interest Act, s. 4). For example: "1.5% per month (18% per year)".
• Stay far below 35% a year. Since January 1, 2025, the Criminal Code's criminal interest rate is an annual percentage rate over 35% (Criminal Code, s. 347).
• Don't add GST/HST to a late-payment charge; the CRA says GST/HST is payable only on the original invoiced amount (CRA: GST/HST in special cases).
• Follow up on a schedule: a friendly note before the due date, one on the day, then about 7 and 30 days late. Stick to facts and a clear next step.
• An unpaid invoice still counts for GST/HST. You report the tax for the period of the invoice date, paid or not (CRA: Charge and collect the tax).

1. Payment terms that get you paid

The terms are what you and your client agreed about money: when it's due, how much up front, how to pay, and what happens if it's late. Put them in the quote, proposal or contract the client accepts before you start, and repeat the key parts on each invoice. Common choices:

• Due on receipt: payment is due as soon as the client gets the invoice. Clear, but many businesses pay on a fixed cycle anyway, so it can still take a few weeks.
• "Net 15" or "Net 30": shorthand for due 15 or 30 days after the invoice date. It's only shorthand, so print the actual due date on the invoice (people read "Net" terms differently, and some count from the day they received it). Our free invoice template works the due date out from the terms you type, and so does our invoice generator.
• A deposit or milestone payments: for example 50% before you start and the rest on delivery, or one payment per milestone. It lowers what's at risk and shows whether a client pays at all before you've done much work. Say in writing whether a deposit is refundable and how it's credited to the final invoice.
• How to pay and who pays. List the payment methods, and ask who handles invoices (often an accounts payable address, not your contact) and whether they need a purchase order (PO) number or a supplier form first. A missing PO number is a common reason an invoice sits unpaid.

GST/HST on a deposit. The CRA says not to collect GST/HST when a customer gives you a deposit towards a purchase, and to collect it when you apply the deposit to the price (CRA: GST/HST in special cases, Deposits). If the "deposit" is really the first part of your fee, invoiced up front, the tax is payable on each part as it's paid or becomes due (Excise Tax Act, s. 168(2)). Which one yours is depends on the agreement; ask an accountant if you're not sure. More on what an invoice must show: GST/HST invoice requirements (for $500 or more, the CRA lists the terms of payment as one of the items).

2. Late fees in Canada: what makes them hold up

In Canada there's no general law that adds interest to a late business invoice the way the UK's does (below); none of the federal or provincial sources we checked sets one outside construction. So interest on a late invoice mostly comes down to what your client agreed to, and the federal Interest Act and Criminal Code set the limits.

1. Agree it in advance, in writing. The Interest Act lets anyone "stipulate for, allow and exact ... any rate of interest or discount that is agreed on", except where an Act of Parliament says otherwise (Interest Act, s. 2). As we read it, the key word is agreed: a late fee printed for the first time on an invoice, after the work is done, may not count as agreed. Put it in the quote or contract the client accepts before you start.
2. Give the yearly rate. When interest in "any written or printed contract" is a rate "per day, week, month" or for any period under a year, no more than 5% a year is "chargeable, payable or recoverable" unless the contract "contains an express statement of the yearly rate or percentage of interest to which the other rate or percentage is equivalent" (Interest Act, s. 4). So write "1.5% per month (18% per year)", not just "1.5% per month". If a client pays interest that wasn't chargeable under s. 4, they can get it back (s. 5).
3. Simple, or compounded? Section 4 doesn't say how the yearly figure must be worked out. In Solar Power Network Inc. v. ClearFlow Energy Finance Corp., 2018 ONCA 727, the Court of Appeal for Ontario found that a loan agreement which turned its daily rate into a yearly one by simple arithmetic complied with s. 4, and pointed to cases "that stand for the proposition that stating an equivalent nominal rate may be sufficient", such as Smith v. Canadian Tire (2.4% per month stated as 28.8% a year) and Nanaimo Shipyard Ltd. v. Keith, 2008 BCSC 1150 (interest on overdue accounts "at the rate of 2% per month (24% per annum compounded monthly)") (the decision). That's one appeal court, so the simplest safe wording is to say simple interest: then 1.5% a month really is 18% a year. If you compound monthly, the true yearly figure is higher (1.5% a month compounded is 19.56% a year); state that it's compounded.
4. No rate agreed. If interest is payable "by the agreement of parties or by law" but no rate is fixed, the rate is 5% a year (Interest Act, s. 3). Whether a court adds interest when it gives judgment on an unpaid invoice is a question for the court or a lawyer; this page doesn't cover it.
5. Stay well under the criminal rate. It's an offence to enter into, offer, advertise or receive interest at a "criminal rate": since January 1, 2025, "an annual percentage rate of interest calculated in accordance with generally accepted actuarial practices and principles that exceeds 35 per cent on the credit advanced" (Criminal Code, s. 347). In that section "interest" includes any "fee, fine, penalty, commission or other similar charge", so a flat late fee counts too. Whether s. 347 applies to an overdue invoice at all is a legal question; ordinary rates of one or two percent a month are far below it anyway. A flat fee is where it can bite: a large fixed charge on a small invoice that's only a few days late can work out to a very high yearly rate. (The Criminal Interest Rate Regulations exempt some business loans over $10,000 to a borrower that isn't an individual, but they're written for lenders; don't rely on them for a late fee: Regulations, s. 1.)
6. No GST/HST on the late charge. The CRA: "Do not charge the GST/HST on late-payment surcharges. GST/HST is payable only on the original invoiced amount." Its example: a $100 price plus GST of $5 ($100 × 5%), plus a $5 late charge, so the customer pays $110 (CRA: GST/HST in special cases; the law: Excise Tax Act, s. 161). Show the interest on a separate line or a new invoice, without tax.

Copy-ready payment terms (change the [bracketed] parts; the rate is the calculator's example, not a recommendation):

Payment terms
- Invoices are due [30] days after the invoice date. The due date is printed on each invoice.
- [Deposit: 50% of the project fee is invoiced when you accept this quote and is due before work starts. It is credited to the final invoice.]
- Late payment: overdue amounts bear simple interest at 1.5% per month (18% per year) from the due date until paid.
- [If an invoice is more than 14 days overdue, I may pause work until it is paid.]
- Pay by [Interac e-Transfer to name@example.com / bank transfer / other]. Please include the invoice number.

3. The late-payment interest calculator

Enter the unpaid amount, the due date, the payment date and the rate from your terms. It counts the days late, shows a monthly rate as a yearly one (and the other way round), and works out the interest as simple interest. It doesn't decide what you're entitled to charge; your agreement and the law do.

The starting numbers are made up to show how it works; they aren't a recommended rate. How it works: below.

4. Following up: when and what to send

A schedule takes the awkwardness out of it: you're not deciding each time whether it's "too soon". These are our suggestions, not rules:

• Check the basics first: did the invoice reach the right person, does it have their PO number, is your name and address on it? A quick "did this arrive?" often solves it.
• Stay factual and friendly. No guilt, no sarcasm, no threats you won't carry out. Assume it's a process problem until you know otherwise; most are.
• Keep a record of each invoice, reminder and reply (dates matter if you ever go to small claims), and phone if emails go unanswered.
• Pause new work only if your agreement allows it, and say so in advance.

If you'd rather not track this by hand, our paid Freelance Billing Kit by Small Rows (US$12, one-time) marks each invoice Paid, Part paid, Open or Overdue and counts the days overdue. Like this page, it's a record-keeping tool, not legal advice.

5. Copy-ready reminder emails

Plain text, so they paste cleanly into any email app. Replace everything in [brackets], and delete the bracketed interest lines if your agreement has no late-payment interest.

A few days before the due date (about 3 days)

Subject: Invoice [number] is due on [due date]

Hi [first name],

A quick note that invoice [number] for [amount] is due on [due date]. I've attached it again in case it's useful.

You can pay by [payment method and details]. Please include the invoice number so I can match the payment.

If anything on the invoice needs changing, or your team needs something from me first (a PO number, a supplier form), just let me know.

Thanks,
[your name]

On the due date

Subject: Invoice [number] is due today

Hi [first name],

Invoice [number] for [amount] is due today, [due date]. If it's already on its way, thank you, and please ignore this note.

Payment details: [payment method and details]. The invoice is attached again.

If it's going to take a little longer, could you let me know when I should expect it?

Thanks,
[your name]

About 7 days late

Subject: Invoice [number]: payment now overdue

Hi [first name],

I haven't received payment yet for invoice [number] ([amount]), which was due on [due date]. Could you check on it and let me know when it will be paid?

If there's a problem with the invoice or the work, tell me and I'll sort it out. If it's waiting for someone else's approval, who should I contact?

[Only if your agreement includes it:] As set out in our agreement, interest of [rate] per month ([rate per year] per year) applies to overdue amounts from the due date.

Thanks,
[your name]

About 30 days late: final notice

Subject: Final notice: invoice [number], [amount], now [days] days overdue

Hi [first name],

Invoice [number] for [amount] was due on [due date]. I wrote about it on [dates of earlier reminders] and haven't yet received payment or a payment date.

Please pay [amount owed] by [date, e.g. 10 days from today]. [Only if your agreement includes interest:] This includes interest of [interest] to [date], at the rate in our agreement ([rate] per month, [rate per year] per year).

If I haven't received payment or heard from you by then, I will [pause any further work / take the next step to recover the amount, such as a claim in small claims court].

I'd much rather settle this directly, so if something is holding it up, please reply and tell me.

[your name]
[phone number]

Only name a next step you're prepared to take, and keep the tone the same as your first email. If the client disputes the work or the amount, stop sending reminders and talk it through; that's a disagreement to resolve, not a late payment.

6. If it still isn't paid

• Talk to them. A phone call, a payment plan in writing, or a part payment now is often worth more than a long fight.
• Small claims court. Each province has its own court and limits; here are two we checked:
  • Ontario: Small Claims Court hears claims of $50,000 or less (since October 1, 2025; it was $35,000). Ontario says a claim can't be filed more than two years after the incident in most cases (Ontario: Small claims court, O. Reg. 626/00).
  • Alberta: the Civil Division of the Alberta Court of Justice hears claims up to $100,000 (Alberta Court of Justice: Civil, Filing a civil claim).
  For other provinces and territories, look up the provincial court's own small claims page. Limitation periods apply everywhere, so don't wait years.
• A lawyer or a collection agency for larger amounts or if the client won't engage. Ask what it costs first; on a small invoice it may not be worth it.

7. GST/HST and income tax when a client pays late or never

• GST/HST is due by the invoice date, not the payment date. The CRA: "Your GST/HST return for the reporting period that covers the invoice date should include the GST/HST you have charged, whether or not you have received payment" (CRA: Charge and collect the tax; Which GST/HST return to use; the law: Excise Tax Act, s. 152 and s. 168). So set the tax aside when you invoice, even if the client is late. Our tax set-aside calculator works out how much.
• If it becomes a bad debt, you can get back the GST/HST you already reported and remitted as an adjustment on line 107 of your return (line 108 with TELEFILE). The CRA says you have to deal with the client at arm's length, and then write the amount off as a bad debt in your records (CRA: Which GST/HST return to use). The deduction has to be claimed within 4 years of the filing due date for the period you wrote it off, and if you're paid later you add the tax back (Excise Tax Act, s. 231).
• Income tax: you can generally deduct a bad debt on line 8590 of form T2125 if you decided in the year that the account receivable is a bad debt and you'd already included it in income (CRA: Line 8590, Bad debts).
• When to write a debt off, and the details, are questions for an accountant.

8. Prompt payment laws (construction only)

You may have heard of "prompt payment" laws that set deadlines for paying invoices. The ones we checked apply to construction: Ontario's Construction Act (Part I.1, Prompt Payment; Ontario: Construction Act), Alberta's Prompt Payment and Construction Lien Act (Alberta: Prompt payment rules for the construction industry) and the federal Prompt Payment for Construction Work Act, for construction work on federal property (Justice Laws). We didn't find a general prompt payment law for freelance services in Canada, but we didn't check every province, so don't take that as certain.

Outside Canada: the UK

Only if your client is a UK business. Whether UK law applies to your contract is a legal question.

• Statutory interest by law on late business-to-business payments, under the Late Payment of Commercial Debts (Interest) Act 1998: 8% a year plus the Bank of England base rate. You can't claim it if your contract sets a different rate (GOV.UK: Interest on late commercial payments). The base rate used is the one in force on 30 June or 31 December before the interest starts (the rate order, art. 4, which covers England, Wales and Northern Ireland; Scotland has its own order, which we didn't check); check the current Bank Rate rather than relying on a figure here.
• When it's late: with no agreed date, 30 days after the customer gets the invoice or you deliver (whichever is later). An agreed date between businesses must usually be within 60 days, unless a longer one is fair to both (30 for public authorities) (GOV.UK: When a payment becomes late, the Act, s. 4).
• Fixed compensation per late invoice, on top of interest (GOV.UK: Claim debt recovery costs, the Act, s. 5A):

GOV.UK's own example uses a made-up base rate of 0.5%: on £1,000, 8.5% is £85 a year, 23p a day, and £11.50 after 50 days. It also says to send a new invoice if you add interest.

Outside Canada: New York

Only if your client hires you in New York State or New York City. Whether these laws cover you as a freelancer based in Canada is a legal question we can't answer.

• New York State's Freelance Isn't Free Act (General Business Law, Article 44-A, since August 28, 2024; NY Department of Labor). It covers a freelancer who is one person (incorporated or not) hired for $800 or more, alone or added up with all their contracts with the same client over the previous 120 days. Lawyers, licensed medical professionals, construction contractors and sales representatives (as the state's Labor Law defines them) are left out, and so are government clients (§ 1410).
  • The contract must be in writing, with both parties' names and mailing addresses, the services, their value, the rate and method of pay, the payment date (or how it's set), and any deadline for submitting your list of services; the client keeps it for at least 6 years (§ 1412).
  • Pay is due by the date in the contract, or no later than 30 days after you complete the work if the contract doesn't say. Once you've started, the client can't make you accept less as a condition of being paid on time (§ 1411).
  • A freelancer who wins a late-payment claim is entitled to double damages and reasonable attorneys' fees; the Attorney General can also act (§ 1414).
• New York City's Freelance Isn't Free Act (since May 15, 2017) has the same $800 / 120-day written-contract rule and the same 30-day default. You can file a complaint with the city's Department of Consumer and Worker Protection (DCWP), and the client must respond within 20 days (NYC DCWP: Freelance workers, brochure (PDF)).

Where the sources differ

We read the pages under Sources on 2026-10-08. A few details don't line up neatly, or couldn't be confirmed, and here's how this page handles them:

• Simple or compounded yearly rate (Interest Act, s. 4). The Act doesn't say. One appeal court (Ontario, 2018 ONCA 727) accepted a stated nominal rate; we didn't find a Supreme Court of Canada ruling on it. The page suggests stating "simple interest" so the yearly figure is exact, and the calculator shows both figures for a monthly rate.
• The old criminal rate. Before January 1, 2025, the Criminal Code's text said "an effective annual rate of interest" over 60%, while the Canada Gazette note on the change describes the old limit as "the equivalent of 48% Annual Percentage Rate (APR)" (the previous s. 347, Canada Gazette). The Gazette treats them as the same limit, measured two ways. Only the current 35% APR is used here; it's measured by actuarial practice, so the calculator warns if either the simple or the compounded yearly figure is over it.
• Whether s. 347 applies to an overdue invoice isn't something any page we read answers. The warning is a cautious extra, not a ruling.
• GOV.UK's worked example rounds early. It rounds the daily interest to 23p before multiplying by 50 days (£11.50); unrounded it's about £11.64. Small, but it's why our calculator rounds only once, at the end.
• Ontario's small claims limit changed on October 1, 2025, so pages written before then say $35,000. The regulation now says $50,000.
• Who counts as a freelancer in New York. The city's page says "any individual"; the state law says a natural person or an organization of no more than one person. Both use $800 over 120 days.
• Prompt payment outside construction couldn't be ruled out for every province; see section 8.

How the calculator works

• Days late = the payment date minus the due date. Paid on or before the due date: 0, and no interest. A blank payment date means today.
• Yearly rate: a monthly rate × 12 (simple). It also shows the monthly rate compounded over 12 months, for comparison. A yearly rate is shown ÷ 12 as a monthly one.
• Interest = unpaid amount × yearly rate × days late ÷ 365, simple interest (no interest on interest), in whole cents, rounded half up once at the end. Your contract may count differently (some use 360 days, or whole months); follow it.
• It refuses negative amounts, text it can't read, amounts over $10,000,000, rates over 10% a month or 120% a year, and dates more than 10 years apart, with a plain message.
• It warns when the yearly rate (simple or compounded) is over the Criminal Code's 35%.

When to talk to a lawyer or go to small claims

• Before you sign or write a contract for a large project, or add a late fee you're unsure about;
• when the client disputes the work or the amount, or says they can't pay (insolvency has its own rules);
• when the client is in another province or country, or the amount is above your small claims court's limit;
• before you threaten legal action or hand the debt to a collection agency.

For a smaller amount you may not need a lawyer: small claims courts are designed for people who represent themselves, and the Ontario and Alberta pages above explain the steps and fees.

Related free resources

• Free invoice generator: print the due date and, if agreed, your late-payment wording on each invoice.
• Free freelance invoice template: payment terms and an automatic due date on every invoice.
• What to put on a freelance invoice in Canada: what a GST/HST invoice must show, including the terms of payment.
• Freelance tax set-aside calculator (Canada): how much of each invoice to keep for tax, paid or not.
• Freelance hourly rate calculator: a rate that leaves room for the occasional late payer.

Sources

Read on 2026-10-08: the Justice Laws website, CRA pages on canada.ca, the Canada Gazette, the Court of Appeal for Ontario, Ontario and Alberta government and court pages, GOV.UK and legislation.gov.uk, and New York State and City pages. Check the live page before you rely on it.

• Interest in Canada: Interest Act · 2018 ONCA 727 · Criminal Code, s. 347 · s. 347 before January 1, 2025 · Criminal Interest Rate Regulations · Canada Gazette, SI/2025-4
• CRA and GST/HST: GST/HST in special cases · Charge and collect the tax · Which GST/HST return to use · Line 8590: Bad debts · Excise Tax Act, s. 152 · s. 161 · s. 168 · s. 231
• Prompt payment (construction): Ontario Construction Act · Alberta prompt payment rules · Federal Prompt Payment for Construction Work Act
• Small claims: Ontario: Small claims court · O. Reg. 626/00 · Alberta Court of Justice: Civil · Filing a civil claim
• UK: When a payment becomes late · Interest on late commercial payments · Claim debt recovery costs · the Act (full text) · s. 4 · s. 5A · Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002 · Bank of England: Bank Rate
• New York: NY DOL: Freelance Isn’t Free Act · Article 44-A · § 1410 · § 1411 · § 1412 · § 1414 · NYC DCWP: Freelance workers · Protecting NYC’s freelance workers (PDF)

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