Everything freelancers and small businesses need to know about charging late fees, interest rates, and collecting overdue invoices in Minnesota.
This information is provided for general educational purposes only and does not constitute legal advice. Laws change frequently. Consult a licensed attorney in Minnesota for advice on your specific situation. Last reviewed: 2026.
Usury laws cap the maximum interest rate that can be charged on overdue payments in Minnesota.
8% per annum
Minnesota caps interest at 8% per annum (Minn. Stat. § 334.01). Default rate is 6%. Higher rates for certain transactions.
Banks, savings institutions, and licensed lenders are exempt. Certain commercial transactions may also be exempt.
Understanding what you can and cannot charge for late payments in Minnesota.
Late fees are allowed when contractually agreed. Must comply with the 8% cap when characterized as interest.
No specific cap; interest-based charges limited to 8%.
Standard liquidated damages test.
Minnesota Prompt Payment Act sets deadlines and penalties for late payments in Minnesota.
30 days for state contracts.
Interest at 1.5% per month on late government payments.
Minn. Stat. § 16A.124 requires state agencies to pay within 30 days. Construction has specific provisions.
Certain industries in Minnesota have additional rules around payment timelines, liens, and collection procedures.
Construction: Minn. Stat. § 514.01 requires mechanics' lien filing within 120 days of last furnishing.
Government contracts: Minn. Stat. § 16A.124 mandates 30-day payment with 1.5% monthly interest.
Healthcare: Minnesota has specific prompt payment requirements for insurance claims.
Use this compliant wording on your invoices to clearly communicate your late fee policy in accordance with Minnesota law.
Payment is due within 30 days. A late fee of 0.667% per month (8% per annum, the maximum under Minnesota law, Minn. Stat. § 334.01) will be applied to unpaid invoices.
This wording works because it clearly states the rate, when it applies, and references Minnesota legal standards. Always ensure your stated rate complies with Minnesota's usury limits.
Practical tips for invoicing within Minnesota's legal framework.
Before you can charge a late fee in Minnesota, your client needs to have agreed to the terms. Include your late fee clause directly on your invoice and in your contract.
Minnesota caps interest rates at 8% (statutory). 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 Minnesota's rules with neighboring and commonly referenced states.
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