Enforce payment terms automatically: late fees and early discounts

Late payments are a major challenge for businesses worldwide, increasing financial uncertainty and administrative workload. According to research, 87% of businesses experience overdue invoices (The late payment report), while outstanding payments globally exceed $3 trillion (ResearchandMarkets).

For businesses, this means delayed revenue, cash flow issues, and added time spent chasing payments. Many finance teams already spend up to 14 hours per week managing accounts receivable (Intuit), making manual follow-ups and payment term enforcement difficult to sustain.

To help businesses take control of overdue invoices, Chaser has launched automated late fees and early payment discounts, allowing organizations to enforce payment terms without extra manual work.

Automate late fees to recover costs from overdue payments

Late fees serve as a deterrent for overdue payments while also helping businesses recover the financial impact of late settlements. Instead of manually tracking overdue invoices and applying fees, businesses can now:

• Apply late fees automatically based on overdue days, ensuring invoices reflect penalties as soon as they pass the due date.
• Choose multiple fee types including fixed amounts, percentage-based fees, interest-accruing penalties, and rates tied to official benchmarks such as Bank of England base rates.
• Set custom rules for late fees, defining when charges apply and whether they accrue daily or as a one-time fee.
• Ensure compliance with financial regulations by configuring fee structures based on local policies and business agreements.
  
  

Automating late fees reduces the need for manual tracking, improves on-time payments, and ensures businesses are compensated for overdue invoices. Find out how late fees could be configured to discourage late payments at your business in this help centre article. 

Encourage faster payments with early payment discounts

Early payment discounts give customers an incentive to settle invoices ahead of the due date. Businesses can now:

• Offer percentage-based or fixed-amount discounts to reward early payers.
• Set clear cutoff periods for when a discount is available, ensuring customers have a defined window to take advantage of reduced pricing.
• Automatically apply discounts to invoices that meet the early payment criteria, eliminating the need for manual adjustments.

Encouraging early payments strengthens cash flow and reduces the risk of overdue invoices, benefiting both businesses and their customers. See how you could reward your best-paying customers and incentivize early payments in this help centre article. 

Five key benefits of automating late fees and discounts

Businesses that automate late fees and early payment discounts experience improved cash flow, reduced administrative workload, and better customer relationships. Here’s how:

1. Improve cash flow
   Late fees discourage overdue payments, while early payment discounts encourage faster settlements, ensuring more predictable cash flow.
2. Recover costs from late payments
   Applying automated late fees offsets the financial impact of overdue invoices (cash flow strain, administrative burdens, borrowing costs etc.), helping businesses recover lost revenue.
3. Reduce manual admin
   Automating fee and discount applications saves valuable time and eliminates the need for manual invoice adjustments.
4. Enhance customer relationships
   Clear, consistent payment terms improve transparency, setting expectations while rewarding reliable customers.
5. Increase flexibility
   Businesses can tailor late fees and early payment discounts to their needs with multiple calculation methods and automated application settings.

See all the benefits and capabilities of late fees and early payment discounts; download the fact sheet here.

Customizable automation for greater control

Chaser’s automated late fees and early payment discounts offer flexibility, allowing businesses to set rules that align with their unique needs.

• Segment customers and invoices: Apply late fees and discounts only to specific customer groups or invoice schedules, ensuring a strategic approach to payment term enforcement. For example, you could direct late fees at bad payer groups, and offer early payment discounts to encourage prompt payment from high-risk accounts.
• Define late fee structures and discount rules: Customize fee frequency, percentage rates, and cutoff periods to align with business policies and customer agreements.
• Choose from multiple fee calculation methods: Options include fixed charges, percentage-based fees, interest-accruing penalties, and rates linked to central bank benchmarks.
• Manually override fees and discounts when needed to handle exceptional cases.

By automating late fees and discounts while maintaining full control and customization, businesses can enforce payment terms without negatively impacting customer relationships.

Best practices for using late fees and early payment discounts

To maximize the impact of these features, businesses should follow best practices when implementing late fees and early payment discounts:

1. Communicate payment terms clearly

Ensure customers are aware of late fee policies and early payment discounts by including them in contracts, invoices, and payment reminders. Transparency helps manage expectations and reduces disputes.

2. Apply fees and discounts strategically

Use debtor segmentation to apply late fees to consistently late-paying customers while offering discounts to incentivize reliable early payers.

3. Regularly review fee and discount policies

Monitor customer payment behavior and adjust late fee and discount rules as needed to optimize effectiveness.

4. Use automation to reduce admin work

Let Chaser automatically apply and update fees and discounts to ensure accuracy and save time.

5. Maintain compliance with local regulations

Different countries have specific rules on late fees and interest charges. Ensure that automated fees align with financial regulations in relevant regions.

Improve your cash flow with automated late fees and discounts

With businesses owed trillions in global late payments (ResearchandMarkets), enforcing payment terms effectively is essential for financial stability. Chaser’s new late fee and early payment discount automation ensures that businesses can:

• Apply late fees consistently and accurately
• Incentivize faster payments with discounts
• Reduce manual work in credit control
• Improve cash flow and predictability
• Maintain strong customer relationships

Chaser’s automated late fees and early payment discounts are now available, giving businesses the tools they need to control overdue invoices and reward early payers. Try Chaser for free for 10 days and discover how automation can help your business reduce late payments and improve cash flow.