Good invoice management helps you stay on top of cash flow and get paid on time. Setting up late fees on overdue invoices gives your billing process more structure, nudging customers to pay promptly and giving you a clear way to handle delays.
By configuring late fees, you create an incentive for customers to pay on time and reduce the risk of outstanding balances.
Purpose of Late Fees
Late fees help you manage delayed payments more effectively. They make it possible to offer incentives such as discounts for timely payment, knowing that any delay can be offset by the fee applied.
When a late fee is applied, the customer receives an email notification alongside the payment confirmation email, setting out the late fee policy.
Setting up Late Fees for All Invoices
To set up late fees across all invoices, navigate to Invoice Settings under the Payments section.
Enable the Charge Late Fees option within the Payment Settings subsection.
Next, click the "Manage" button to customise the late fee settings, including the fee type, frequency, and grace period.
By default, the fee will be applied to overdue invoices generated after the feature is enabled, though you can adjust this at the individual invoice level.
Activating Late Fees for a Specific Invoice
To activate late fees for a specific invoice, navigate to the invoice from the Invoice list.
Locate the "Late Fees" option in the action dropdown menu in the top right corner.
When enabling this feature for the first time, it will adopt the global settings, which you can then modify to suit specific requirements.
You have several options for customising late fees, including setting various intervals, establishing a grace period, applying a flat one-time fee, and defining the maximum chargeable fee.
Late fees are applied automatically once an invoice is overdue. If an invoice includes a payment schedule, the due date for each instalment will be considered for a late fee application.
Configuring late fees gives you more control over your invoicing process, making sure delayed payments are handled appropriately. It helps maintain cash flow and encourages customers to meet payment deadlines, supporting a more predictable billing cycle.