Everything freelancers and small businesses need to know about charging late fees, interest rates, and collecting overdue invoices in Arkansas.
This information is provided for general educational purposes only and does not constitute legal advice. Laws change frequently. Consult a licensed attorney in Arkansas for advice on your specific situation. Last reviewed: 2026.
Usury laws cap the maximum interest rate that can be charged on overdue payments in Arkansas.
17% maximum (constitutional cap)
Arkansas has one of the strictest usury provisions in the country, enshrined in the state constitution (Amendment 89). The maximum lawful interest rate is 17% per annum, and this cap applies broadly to most transactions. The default rate when no rate is specified is 6% per annum.
Arkansas's constitutional usury cap applies to virtually all transactions, including commercial ones. Unlike most states, there is very limited exemption for business loans. This makes Arkansas uniquely strict for commercial lending.
Understanding what you can and cannot charge for late payments in Arkansas.
Late fees in Arkansas must comply with the 17% constitutional interest cap. Any late fee that effectively charges more than 17% per annum when calculated against the outstanding balance may be considered usurious. Fees must be contractually agreed upon.
Effectively capped by the 17% constitutional usury limit. Late fees combined with interest cannot exceed this rate.
Arkansas courts strictly enforce the constitutional usury cap. Late fees are scrutinized to ensure they do not circumvent the 17% maximum when combined with any interest charges.
Arkansas Prompt Payment Act sets deadlines and penalties for late payments in Arkansas.
30 days after receipt of a proper invoice for state contracts.
Interest at the maximum legal rate on late payments.
Arkansas requires state agencies and contractors to make timely payments. For public construction projects, prime contractors must pay subcontractors within a reasonable time after receiving payment. The strict usury cap of 17% limits the penalty interest that can be charged.
Certain industries in Arkansas have additional rules around payment timelines, liens, and collection procedures.
Construction: Arkansas mechanics' lien law (Ark. Code § 18-44-101) requires filing within 120 days of last furnishing labor or materials. A 10-day preliminary notice is required for residential projects.
Government contracts: Arkansas's prompt payment requirements cover state agencies and public construction. The 17% constitutional usury cap limits penalty interest on late government payments.
Healthcare: Arkansas has specific prompt payment laws for insurance claims (Ark. Code § 23-99-208) requiring payment within 30 days of clean claims.
Use this compliant wording on your invoices to clearly communicate your late fee policy in accordance with Arkansas law.
Payment is due within 30 days of invoice date. Invoices unpaid after the due date will accrue a late fee of 1.5% per month (not to exceed the 17% per annum constitutional maximum under Arkansas Amendment 89). This fee is agreed upon as reasonable compensation for costs associated with late payment.
This wording works because it clearly states the rate, when it applies, and references Arkansas legal standards. Always ensure your stated rate complies with Arkansas's usury limits.
Practical tips for invoicing within Arkansas's legal framework.
Before you can charge a late fee in Arkansas, your client needs to have agreed to the terms. Include your late fee clause directly on your invoice and in your contract.
Arkansas caps interest rates at 17% (constitutional cap). Charging above this limit can void your right to collect interest entirely and may expose you to penalties.
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Compare Arkansas's rules with neighboring and commonly referenced states.
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