Everything freelancers and small businesses need to know about charging late fees, interest rates, and collecting overdue invoices in Massachusetts.
This information is provided for general educational purposes only and does not constitute legal advice. Laws change frequently. Consult a licensed attorney in Massachusetts for advice on your specific situation. Last reviewed: 2026.
Usury laws cap the maximum interest rate that can be charged on overdue payments in Massachusetts.
No general civil cap; 6% default; 20% criminal
Massachusetts has no general civil usury cap. Default rate is 6% per annum (MGL c. 107 § 3). Criminal usury applies above 20% (MGL c. 271 § 49).
No general civil cap. Commercial transactions can be structured freely below the 20% criminal threshold.
Understanding what you can and cannot charge for late payments in Massachusetts.
Late fees are allowed when contractually agreed. Keep effective rates below 20% to avoid criminal usury.
No statutory cap; stay below 20% criminal usury threshold.
Standard liquidated damages framework. Must be a reasonable pre-estimate of damages.
Massachusetts Prompt Pay Act sets deadlines and penalties for late payments in Massachusetts.
30 days for state contracts.
Interest at prime rate plus 1%.
MGL c. 29 § 29C requires state agencies to pay within 30 days. MGL c. 149 § 29E provides construction subcontractor protections.
Certain industries in Massachusetts have additional rules around payment timelines, liens, and collection procedures.
Construction: MGL c. 254 requires mechanics' lien filing within 120 days. Notice of identification within 60 days of first providing labor.
Government contracts: MGL c. 29 § 29C mandates 30-day payment with interest at prime plus 1%.
Technology: Large tech sector follows standard commercial terms below the 20% criminal threshold.
Use this compliant wording on your invoices to clearly communicate your late fee policy in accordance with Massachusetts law.
Payment is due within 30 days. A late fee of 1.5% per month (18% per annum) will be assessed on unpaid invoices, in compliance with Massachusetts law (MGL c. 107 § 3).
This wording works because it clearly states the rate, when it applies, and references Massachusetts legal standards. Always ensure your stated rate complies with Massachusetts's usury limits.
Practical tips for invoicing within Massachusetts's legal framework.
Before you can charge a late fee in Massachusetts, your client needs to have agreed to the terms. Include your late fee clause directly on your invoice and in your contract.
Massachusetts caps interest rates at No general cap / 6% default / 20% criminal. 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 Massachusetts's rules with neighboring and commonly referenced states.
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