Everything freelancers and small businesses need to know about charging late fees, interest rates, and collecting overdue invoices in Indiana.
This information is provided for general educational purposes only and does not constitute legal advice. Laws change frequently. Consult a licensed attorney in Indiana for advice on your specific situation. Last reviewed: 2026.
Usury laws cap the maximum interest rate that can be charged on overdue payments in Indiana.
No general cap for commercial; 10% default rate
Indiana does not impose a general usury cap on commercial transactions. The default rate is 10% per annum (IC 24-4.6-1-102). Judgment interest is 8%.
Commercial loans and B2B transactions are generally exempt from usury restrictions.
Understanding what you can and cannot charge for late payments in Indiana.
Indiana allows late fees when specified in the contract. No general usury cap for commercial transactions provides significant flexibility.
No statutory cap for commercial transactions.
Standard contract law principles apply. Late fees that function as penalties may be unenforceable.
Indiana Prompt Payment Act sets deadlines and penalties for late payments in Indiana.
35 days for state contracts.
Interest at 1% per month on late government payments, plus attorney's fees.
IC 5-17-5 requires state agencies to pay within 35 days. Construction has specific subcontractor provisions under IC 36-1-12-14.
Certain industries in Indiana have additional rules around payment timelines, liens, and collection procedures.
Construction: Indiana mechanics' lien law (IC 32-28-3) requires filing within 90 days. A notice of intent must be given within 60 days.
Government contracts: IC 5-17-5 mandates 35-day payment with 1% monthly interest.
Manufacturing: Indiana's large manufacturing sector uses standard commercial terms.
Use this compliant wording on your invoices to clearly communicate your late fee policy in accordance with Indiana law.
Payment is due within 30 days of invoice date. A late fee of 1.5% per month (18% per annum) will be assessed on invoices unpaid after the due date. Indiana does not impose a general usury cap on commercial transactions (IC 24-4.6-1-102).
This wording works because it clearly states the rate, when it applies, and references Indiana legal standards. Always ensure your stated rate complies with Indiana's usury limits.
Practical tips for invoicing within Indiana's legal framework.
Before you can charge a late fee in Indiana, your client needs to have agreed to the terms. Include your late fee clause directly on your invoice and in your contract.
Indiana caps interest rates at No general cap / 10% default. Charging above this limit can void your right to collect interest entirely and may expose you to penalties.
A reminder 3 days before the due date and a follow-up the day after dramatically reduces late payments. Automated reminders ensure nothing slips through the cracks.
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Compare Indiana's rules with neighboring and commonly referenced states.
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