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My friend recommended to put a small percent late payment fee, stated in the contract and on each invoice.

Haven't really used it yet because we don't have a problem with late payments, but I do think it would work, because our B2B customers are usually very appreciative of saving small percentages when we offer it, and unlikely to just give up that money by being late.

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it doesn’t work if they are insolvent, and it can also backfire if they see this clause as a way to get a cheap cash loan. you should still have the clause but i think if this as a tool for the collections attorney to use if the customer defaults.

You set the rate that is punitive.

It doesn’t work when solvency is an issue but you should know your customers and mitigate that risk accordingly

The rates aren't cheap. The standard late payments I've seen work out to approximately 19.5-20% APR.

Start doing it now, before ot becomes a problem!

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