One late payment is a late fee. A pattern is a supplier holding your orders. Repeated late payments show up on your business credit and drop your Paydex score below the line that opens doors with new vendors. Every cost in this list is preventable with a reminder.
Done in seconds. No sign-up required.
Each one stacks on the previous one. The first is mechanical. The last is structural.
typical monthly late fee on past-due B2B invoices (about 18% APR)
Uniform Commercial Code §2-709, standard commercial practice
annualized return you give up by missing a 2/10 Net 30 early-pay discount
Federal Reserve Bank of Atlanta, "Trade Credit Discounts"
D&B Paydex score that signals "pays on time" — drops fast with a single late payment
Dun & Bradstreet Paydex methodology
how long late payment records typically stay on D&B and Experian Business reports
D&B and Experian Business credit reporting policies
A single late payment is usually absorbed. The vendor sends a polite reminder, you pay, the late fee gets waived as a courtesy. Most vendors don't even mention it.
The second one in the same year is different. The grace evaporates. The late fee gets added to the next invoice. The vendor's AR system flags your account. If you're paying via trade credit, the next order may ship later, or with a deposit required up front.
After three late payments in twelve months, the structural costs kick in. Your Paydex score drops. The vendor's risk team reviews your account. New vendors who pull your D&B report see the slow-pay pattern and either decline trade credit or require COD. By the time you notice the change, you're funding inventory you used to put on Net 30.
The actual problem isn't the late fee. It's that a 75 Paydex closes the door that an 85 Paydex opens.
— summary of D&B Paydex methodology
Rough numbers. Actual fees depend on your contract terms and the vendor.
| How late | Typical fee | What else happens |
|---|---|---|
| 1–30 days late | ~1.5% of invoice | Late fee charged. Vendor relationship still intact. |
| 31–60 days late | ~3% of invoice (compounded) | Vendor may pause future shipments. Reported to D&B. |
| 61–90 days late | ~4.5% of invoice | Account placed on COD or hold. Paydex score drops noticeably. |
| 90+ days late | ~6%+ and rising | Collections risk. Possible suspension of service. Significant Paydex impact. |
The brutal part is the compounding. Late fees stack monthly. Paydex damage takes months of on-time payments to repair. The fix is upstream: don't pay late in the first place. For the underlying math on how due dates work, see Net 30, 60, and 90 explained.
A reminder costs $0. The first email arrives 7 days before the due date — enough time to schedule the ACH, take the early-pay discount, or call the vendor if cash flow is tight. Set it once when the invoice arrives, and the whole cascade above never starts.
Every cost in this article exists because a due date passed without action. None of them require complex software, expensive automation, or a finance team. A reminder a week before the due date is enough to prevent the late fee, capture the early-pay discount, and keep your Paydex score where new vendors are willing to extend trade credit.
For the simplest setup, see the vendor payment reminder pillar. For the spreadsheet-plus-reminder approach that works for most small businesses, see tracker vs reminders.
The most common late fee is 1.5% per month, which annualizes to about 18% APR. State usury laws cap the maximum allowable rate, but 1.5% per month is the standard ceiling most vendors use. The late fee must be disclosed on the invoice or in the underlying contract — a vendor can't add one after the fact without prior agreement.
A single late payment reported to Dun & Bradstreet, Experian Business, or Equifax Business will lower your Paydex score. Paydex runs 1 to 100, with 80 or above signaling "paying on time." Even one payment reported as 1 to 30 days late can drop you below 80. Below 50 signals high risk and triggers stricter terms with new vendors.
Yes, in most cases. Most B2B contracts include a clause allowing the vendor to suspend service, hold orders, or refuse delivery if invoices are past due. After repeated late payments, vendors often move accounts to COD (cash on delivery) or require a deposit before any new work.
On a $5,000 invoice, missing the 2% discount costs $100. The annualized return on taking the discount is roughly 36 to 37%. Skipping it once on a single invoice is small. Skipping it routinely across a year of vendor payments adds up to thousands.
Late payments typically remain on D&B and Experian Business reports for up to 7 years, similar to consumer credit. Their impact fades over time — recent late payments hurt the most, older ones less. The fastest way to improve a Paydex score is to start paying on or before the due date every month going forward.
You can ask. Most vendors will waive a first-time late fee for a long-standing customer, especially if the payment lands a few days late. After two or three slips in a year, that grace usually disappears. The cheapest fix is a reminder a week before the due date.
Free. No account. Takes 30 seconds. You'll get an email a week before each invoice is due, on the day, and follow-ups until you mark it paid. Cheaper than a $112 late fee on a $5,000 bill.
Set Vendor Payment ReminderLast modified: