Everything freelancers and small businesses need to know about charging late fees, interest rates, and collecting overdue invoices in Virginia.
This information is provided for general educational purposes only and does not constitute legal advice. Laws change frequently. Consult a licensed attorney in Virginia for advice on your specific situation. Last reviewed: 2026.
Usury laws cap the maximum interest rate that can be charged on overdue payments in Virginia.
12% general limit; 6% default rate
Virginia's usury limit is 12% (Va. Code § 6.2-303). The default rate when no rate is specified is 6% (Va. Code § 6.2-301).
Commercial loans above certain thresholds may be exempt. Licensed lenders and banks have separate rate structures.
Understanding what you can and cannot charge for late payments in Virginia.
Late fees are allowed when agreed upon in writing. They must be reasonable and not punitive.
No statutory cap; must be reasonable.
Virginia courts apply the liquidated damages doctrine. Fees must approximate actual damages.
Virginia Prompt Payment Act sets deadlines and penalties for late payments in Virginia.
30 days for state contracts; 7 days for construction retainage.
Prime rate + 1% for government contracts.
Va. Code § 2.2-4352 requires government payment within 30 days. Va. Code § 2.2-4354 covers subcontractor protections. Construction retainage must be released within 7 days of completion.
Certain industries in Virginia have additional rules around payment timelines, liens, and collection procedures.
Construction: Strong prompt payment protections. Retainage released within 7 days (Va. Code § 2.2-4354).
Government contracts: Va. Code § 2.2-4352 mandates 30-day payment with interest.
Federal contractors: Many Virginia businesses serve the federal government and are also covered by the federal Prompt Payment Act.
Use this compliant wording on your invoices to clearly communicate your late fee policy in accordance with Virginia law.
Payment is due within 30 days. A late fee of 1% per month (12% per annum) will be assessed on unpaid invoices, within the limits of Virginia law (Va. Code § 6.2-303).
This wording works because it clearly states the rate, when it applies, and references Virginia legal standards. Always ensure your stated rate complies with Virginia's usury limits.
Practical tips for invoicing within Virginia's legal framework.
Before you can charge a late fee in Virginia, your client needs to have agreed to the terms. Include your late fee clause directly on your invoice and in your contract.
Virginia caps interest rates at 12% general / 6% 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 Virginia's rules with neighboring and commonly referenced states.
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