Everything freelancers and small businesses need to know about charging late fees, interest rates, and collecting overdue invoices in Montana.
This information is provided for general educational purposes only and does not constitute legal advice. Laws change frequently. Consult a licensed attorney in Montana for advice on your specific situation. Last reviewed: 2026.
Usury laws cap the maximum interest rate that can be charged on overdue payments in Montana.
15% per annum
Montana caps interest at 15% per annum (Mont. Code § 31-1-107). Default rate is 10%.
Banks and licensed financial institutions are exempt.
Understanding what you can and cannot charge for late payments in Montana.
Late fees are allowed when contractually agreed. Must comply with the 15% cap.
No specific cap; interest-based charges limited to 15%.
Standard liquidated damages test.
Montana Prompt Payment Act sets deadlines and penalties for late payments in Montana.
30 days for state contracts.
Interest on late payments.
Montana requires state agencies to pay within 30 days. Construction has mechanics' lien protections.
Certain industries in Montana have additional rules around payment timelines, liens, and collection procedures.
Construction: Mont. Code § 71-3-521 requires mechanics' lien filing within 90 days.
Government contracts: 30-day payment with interest penalties.
Mining and ranching: Montana's resource industries follow standard commercial terms.
Use this compliant wording on your invoices to clearly communicate your late fee policy in accordance with Montana law.
Payment is due within 30 days. A late fee of 1.25% per month (15% per annum, the maximum under Montana law, Mont. Code § 31-1-107) will be applied to unpaid invoices.
This wording works because it clearly states the rate, when it applies, and references Montana legal standards. Always ensure your stated rate complies with Montana's usury limits.
Practical tips for invoicing within Montana's legal framework.
Before you can charge a late fee in Montana, your client needs to have agreed to the terms. Include your late fee clause directly on your invoice and in your contract.
Montana caps interest rates at 15% (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.
If you ever need to escalate collection efforts in Montana, documented reminder history strengthens your position. Automated systems keep logs automatically.
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Compare Montana's rules with neighboring and commonly referenced states.
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