AI agents for business finance: what they can and can't do
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The short answer
Put the late payment terms in the contract before work starts: a due date, a simple interest rate (for example 2% a month on the unpaid amount, calculated daily), recovery costs and a right to pause work. We found no Nigerian statute giving automatic interest on late business invoices, so the contract is your main basis, and enforcement against a Nigerian client's assets usually happens in Nigeria.
Late payment is the most common complaint freelancers in South Africa have about Nigerian clients, and the usual advice to 'add a late fee' is not enough on its own. A late payment clause only helps if it is clear, was agreed before the work started, sits in a contract with a sensible choice of law, and you are prepared to apply it. This guide explains how to write one and what enforcing it across the border really involves.
Why a clause matters across borders
We did not find a Nigerian statute that gives suppliers an automatic right to interest on late business invoices, so your entitlement in a Nigerian dispute will mostly come from what the contract says. A clear clause also changes behaviour: finance teams pay the invoices that cost more to delay.
What a good clause contains
- Due date
- A specific number of days from the invoice date, for example 14 days
- Rate
- A simple monthly or annual percentage, stated clearly, for example 2% per month
- How it is calculated
- Simple interest on the unpaid amount from the due date until payment, calculated daily
- Currency
- Interest is payable in the currency of the invoice
- Recovery costs
- Reasonable costs of collecting the debt, if you want them covered
- Suspension
- Your right to pause work while any invoice is overdue by more than a set number of days
- Order of payment
- Payments go first to interest and costs, then to the oldest invoice
Sample wording (adapt with a lawyer)
Keep the rate defensible. A very high rate invites the argument that it is a penalty rather than compensation, and a court in either country may decline to enforce it. Interest that roughly reflects your cost of money plus a margin is easier to defend than a punitive figure.
Worked example (illustrative figures only)
You invoice a Lagos agency ₦2,000,000 with 14-day terms and a 2% per month simple interest clause. The agency pays 45 days after the due date. Interest is ₦2,000,000 x 2% x 45/30 = ₦60,000. On the same terms, an invoice paid 15 days late carries ₦20,000 of interest.
Choice of law and where disputes go
A late payment clause sits inside the wider contract, and the governing law clause decides which country's rules interpret it. South African law is familiar to you; Nigerian law is familiar to your client and its courts; a neutral arbitration seat is another option for larger contracts. Our guide to governing law in a Nigerian client contract sets out the trade-offs. Whichever you choose, enforcing a judgment against a client's assets usually happens where the assets are, which for a Nigerian client is Nigeria.
How to enforce, step by step
- Send a polite reminder on the due date with the invoice attached.
- At 7 days overdue, send a statement showing the principal and the interest accrued under the clause.
- At 30 days, pause work if the contract allows it and say so in writing.
- Send a formal letter of demand giving a final date and stating the interest claimed.
- Consider whether the amount justifies a Nigerian lawyer or debt recovery. For small invoices, a negotiated settlement that waives some interest often costs less than litigation.
In practice, many freelancers use the clause as leverage: they waive the interest if the principal is paid by a set date. That is fine, but put the waiver in writing and say it is a one-off, so the clause stays alive for future invoices. Our guide on dealing with a late-paying Nigerian client covers the conversation itself.
Tax on interest you collect
Late payment interest is income. If you are South African tax resident it is declared to SARS with your other freelance income and converted to rand in the same way, at the spot rate when received or the year's average rate if you elect it under Interpretation Note 63.
Keep the paper trail
Whatever you decide about interest, keep the signed contract, every invoice, reminders and the client's replies in one place. If you ever need a Nigerian lawyer to act, that file is the first thing they will ask for.
Where Pryme fits
Pryme invoicing lets you put payment terms on every invoice, and the Finance agent prepares reminders and an overdue statement for you to approve before anything is sent. A naira Business Account makes it easy for Nigerian clients to pay by local transfer, which removes one common excuse for delay.
Questions people ask
Can I charge interest on a late invoice from a Nigerian client?
Yes, if your contract says so. We did not find a Nigerian statute giving automatic interest on late business invoices, so the agreed clause is what you rely on.
What late payment interest rate is reasonable?
There is no official figure for cross-border freelance contracts. A rate close to your cost of money plus a margin is easier to defend than a punitive one.
How do I calculate late payment interest?
Simple interest is the unpaid amount x monthly rate x days late / 30. For ₦2,000,000 at 2% a month, 45 days late, that is ₦60,000.
Is late payment interest taxable in South Africa?
Yes, for South African residents it is income declared to SARS with your other freelance income.
Sources
- SARS Interpretation Note 63 (Issue 2, 12 August 2015): rules for translating foreign currency amounts · accessed Oct 2026
- SARS: Provisional Tax (updated 21 August 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.