Charging late fees the right way

You can charge interest or a late fee for overdue payment, as long as it is agreed in your terms.

Make it enforceable

State the rate up front, for example '2% per month on overdue amounts'. A fee no one agreed to is hard to collect.

GST on the late fee

Interest or a penalty for delayed payment is generally part of the value of the supply, so GST applies to it at the same rate as the original supply. Add it on a clearly labelled line when you bill it.