Glossary
Late-payment penalty
Definition
A late-payment penalty is a rate written in the contract and accepted at signing, applied to amounts paid after the due date.
Explanation
The penalty puts a price on delay. Its effect comes less from the amount than from its existence: a client who knows a delay costs something moves your invoice up the pile. It must be written before the order, clearly: a percentage, a basis and a period. The payment-terms template offers wording to adapt and have reviewed.
Example
Fictional example. A contract sets a penalty of 1.5% of the amount including tax per month of delay. A 4,000,000 FCFA invoice paid two months late triggers a 120,000 FCFA penalty. Most of the time, mentioning it in the reminder is enough to get a payment date.