Late payment
A late payment occurs when a customer pays an invoice after the agreed due date, creating delays in cash flow and potential penalty triggers.
A late payment is any payment received after the contractually agreed due date. High rates of late payment are a key indicator of cash flow risk and may signal issues with the invoicing process, customer financial health, or inadequate collection follow-up.
Example: A SaaS vendor with Net 30 payment terms finds that 30% of enterprise invoices are paid between Day 31 and Day 60. It introduces automated reminders at Day 20 and Day 28, and adds a 1.5% monthly late payment fee clause in new contracts to incentivize timely payment.
