Late Fees on Invoices in Alabama
What Alabama contractors and small businesses need to know about charging late fees, interest rates, prompt payment laws, and mechanics lien deadlines.
Max Interest Rate
1% per month (12% per annum) on construction; 6% default
Small Claims Limit
$6,000
Small Claims Court (District Court)
Mechanics Lien Deadline
6 months from the last day of furnishing labor or materials
Alabama Prompt Payment Act
Alabama Prompt Payment Act, Ala. Code § 8-29-1 et seq.
Alabama requires owners to pay contractors within 30 days of a proper invoice. Contractors must pay subcontractors within 7 days of receiving payment from the owner.
Late fee rules for Alabama invoices
Alabama allows contractual late fees that are reasonable. The Prompt Payment Act provides statutory interest and attorney fees for construction contracts.
Alabama's default legal interest rate is 6% per annum. The Prompt Payment Act provides for 1% per month on construction debts plus reasonable attorney fees.
Important disclaimer
This page provides general information about Alabama late fee rules. It is not legal advice. Laws change, and your specific situation may have unique factors. For disputes involving significant amounts, consult a licensed attorney in Alabama.
Demand letters and mechanics liens in Alabama
Alabama does not require a formal demand letter before filing a mechanics lien, but a written demand is recommended and often effective.
Mechanics lien deadline: 6 months from the last day of furnishing labor or materials. A verified statement of lien must be filed with the probate judge.
Sample late fee clause for Alabama invoices
“Payment is due within the terms specified above. A late fee of 1.5% per month (1% per month (12% per annum) on construction; 6% default maximum per Alabama law) will be applied to all balances remaining unpaid after the due date. Pursuant to the Alabama Prompt Payment Act (Ala. Code § 8-29-1 et seq.), the undersigned reserves all rights to pursue collection including but not limited to mechanics lien filing, small claims action (up to $6,000 in Small Claims Court (District Court)), and referral to collections.”
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Start Free TrialFrequently asked questions — Alabama
What is the maximum late fee I can charge on an invoice in Alabama?▾
In Alabama, Alabama's default legal interest rate is 6% per annum. The Prompt Payment Act provides for 1% per month on construction debts plus reasonable attorney fees. Always disclose late fee terms in your contract or invoice before work begins.
Does Alabama have a prompt payment act?▾
Yes. Alabama requires owners to pay contractors within 30 days of a proper invoice. Contractors must pay subcontractors within 7 days of receiving payment from the owner.
What is the small claims court limit in Alabama?▾
The small claims court limit in Alabama is $6,000. Claims are filed in Small Claims Court (District Court). You generally do not need an attorney for small claims.
How long do I have to file a mechanics lien in Alabama?▾
In Alabama, 6 months from the last day of furnishing labor or materials. A verified statement of lien must be filed with the probate judge.
Do I need to send a demand letter before filing a lien in Alabama?▾
Alabama does not require a formal demand letter before filing a mechanics lien, but a written demand is recommended and often effective.