Everything freelancers and small businesses need to know about charging late fees, interest rates, and collecting overdue invoices in Hawaii.
This information is provided for general educational purposes only and does not constitute legal advice. Laws change frequently. Consult a licensed attorney in Hawaii for advice on your specific situation. Last reviewed: 2026.
Usury laws cap the maximum interest rate that can be charged on overdue payments in Hawaii.
10% per annum
Hawaii caps interest at 10% per annum (HRS § 478-2). The default rate is 10%. Hawaii's usury law applies broadly with limited exemptions.
Banks, licensed lenders, and certain regulated financial transactions are exempt. Commercial real estate loans above $750,000 are also exempt.
Understanding what you can and cannot charge for late payments in Hawaii.
Hawaii allows late fees when contractually agreed upon. Late fees must comply with the 10% usury cap when characterized as interest.
No specific statutory cap; interest-based charges limited to 10%.
Courts apply the standard liquidated damages test. Fees must be a reasonable pre-estimate of damages.
Hawaii Prompt Payment Act sets deadlines and penalties for late payments in Hawaii.
30 days for government contracts.
Interest at 1% per month on late payments.
Hawaii requires state agencies to pay within 30 days under HRS § 103-10. Construction has specific subcontractor payment protections.
Certain industries in Hawaii have additional rules around payment timelines, liens, and collection procedures.
Construction: Hawaii mechanics' lien law (HRS § 507-42) requires filing within 90 days. A notice to owner must be served within 45 days of first furnishing.
Government contracts: HRS § 103-10 mandates 30-day payment with interest penalties.
Tourism: Hawaii's hospitality industry follows standard commercial terms for vendor payments.
Use this compliant wording on your invoices to clearly communicate your late fee policy in accordance with Hawaii law.
Payment is due within 30 days of invoice date. A late fee of 0.833% per month (10% per annum, the maximum under Hawaii law, HRS § 478-2) will be applied to invoices unpaid after the due date.
This wording works because it clearly states the rate, when it applies, and references Hawaii legal standards. Always ensure your stated rate complies with Hawaii's usury limits.
Practical tips for invoicing within Hawaii's legal framework.
Before you can charge a late fee in Hawaii, your client needs to have agreed to the terms. Include your late fee clause directly on your invoice and in your contract.
Hawaii caps interest rates at 10% (statutory). Charging above this limit can void your right to collect interest entirely and may expose you to penalties.
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Compare Hawaii's rules with neighboring and commonly referenced states.
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