Invoices should be paid on their due date unless there is a good reason to not pay them: material or service delivered is not complete, invoice is wrongly issued, quality issue... etc.In all other cases, you should have your invoices paid on time according to the due date as committed by your client when he signed the quotation where payment conditions were indicated.
If he doesn't respect his commitment, you should request him to pay additionnal fees for late payments: late payment penalties
Advantages to apply them
First of All, you should include in your sales conditions and contractual clauses that you are entitled to charge late payment penalties in case of overdue invoices with a rate of xx %.Then, you shall include in all your dunning documents sent to customers to remind them to pay the amount of financial fee they have to pay.
Doing that, you educate your customers to pay on time and you may get the payment of these fees to compensate the financial loss due to these overdues.
This practice is suitable for every country for domestic and export business. It should be obvious for all countries where there is a high inflation as in this case the cost of overdue is proportional to the inflation.
- See our tutorial about late penalties including an Excel tool to calculate them.
- See our online calculation tool