[subhobroto]

Clients past a certain size just "forget" about the late payment penalties in my experience, which is why I offer a "on time" payment discount.

I tried both methods and clients would rarely pay the premium compared to those who would avail of the "on time" payment discount.

I have less happier clients when I make them pay a fee than when I take away a discount although mathematically they are the same number.

[jjeaff]

That just gave me a flashback to my college accounting courses. So many examples where a discount was offered for on time payment. Must be a reason that technique has been around long enough to be a fixture in accounting textbooks.

[tixocloud]

From big co perspective, absolutely true. Tons of other priorities to get out of the door than paying on time. Our invoice process was dreadful. Thinking back, if a vendor made it easy for us, we might always pay on-time!