Apply late fees

This article is relevant to Chaser users who want to apply late payment fees to overdue invoices to encourage timely payments and recover additional costs incurred due to late payments.

Set up late payment fees in Chaser

Navigate to Manage and select the Late payment fees tab.
Click on Edit
Choose a late payment fee type, or add multiple types. Multiple types are useful if you want to set a fixed fee for a late payer and additionally charge a fee that increases with each additional day the invoice is overdue:
- Fixed amount (e.g., £10)
- Bank of England base rate UK only (accrued daily)
- Daily % fee (accrued daily)
- Fixed % fee (one-time fee)
  - You can add several decimal places to percentage fees e.g. 5.25556%
Set parameters:
- Days overdue: The number of days overdue when the late fee should activate.
- Calculated from: Choose Due Date or Issue Date.
- Application method: Xero users can choose to Edit existing invoice. All users can choose to trigger an Email notification.
- Choose which schedules to apply the late fees to.
To apply the fees as an additional line item on the invoice (Xero users)
1. Selecting this option will automatically add late fees to the invoice as a new line item
2. Choose invoice-related settings that will reflect on your invoice line item:
  1. Account, Tax Rate, Item code, and Description
  2. You can include a <date> placeholder in your description, which will automatically be replaced with the date the Late Payment Fee was applied. This helps keep your records clear and accurately timestamped, without needing manual updates
Email notification
1. Email 1 (Optional): Invoice eligible for a late fee
  This notification provides a summary of all invoices that qualify for a late fee. No action is required from you at this stage - it's simply a courtesy notification to keep you informed.
2. Email 2 (Mandatory for at least one user): Payment made for eligible Invoice
  This email is triggered when a payment is made through the payment portal for an invoice that was eligible for a late fee. You will need to manually update the invoice in your accounting software during the reconciliation process.
  
  These emails will be sent to users who have the following notification setting enabled. This will be automatically enabled for the user who enabled the late fee.
Select which schedules the late fees will automatically apply to (optional)
- - Late fees will be automatically applied to all eligible invoices based on your settings. This includes invoices already overdue
    - For example, if your rule applies a fee after 14 days, invoices currently 14+ days overdue will accrue fees from the 14th day, not from when the rule was added

- - You can also choose to apply late fees manually to specific invoices if preferred

Late fees will be updated daily at midnight.

Managing late fees manually

Filter by invoices that have a late fee
See invoices with Late fees in your invoice list

Updating Late Fee Settings

Any changes to your late fee setting will apply immediately to all relevant invoices. For example, if you change the fee from 5% to 10%, all existing invoices that have late fees associated will be updated.

Bank of England base rate setting (UK-only)

Chaser updates the Bank of England base rate every day. This rate is an annual interest charge that accrues daily. If the base rate changes, any late fees on your invoice will adjust accordingly.

Example: If the base rate is 5.25%, and your invoice is £100:

1 day overdue: The base rate starts applying.
10 days overdue: You owe £100.14.
100 days overdue: You owe £101.45.
Your debtor will be charged the original rate for the days before the change, and the new rate for the days overdue after the change.
Example: If the invoice is 20 days overdue, and the base rate drops on day 10, your debtor will be charged:
- The old rate for the first 10 days.

- The new rate for the next 10 days.

Use placeholders for late fees in your templates

Personalise your reminders and clearly communicate any fees with your debtors by including invoice-related placeholders. Add these to your templates to automatically show relevant amounts, based on the invoices included.

Single Templates (All Channels)

These placeholders display the fee for each invoice:

Invoice: Late fee – Shows the late fee applied to the invoice.

Multi-Templates (All Channels)

These placeholders display the total of any fees across all invoices included in the chase:

Invoice: Late fee - aggregate – Shows the combined late fee total across all invoices.

Multi-Templates (Email and Letter-only)

If you’re using a multi-template with a table layout, you can include an extra column that shows the specific fee (positive figure) for each invoice:

Invoice: Table with fees – Adds a column to the multi-invoice table to show individual invoice fees or discounts.

These placeholders help ensure your customers always have a clear understanding of what they owe.

Invoices with payment plans

Late fees will not be applied to invoices that are on a payment plan.

Invoices with partial payments

If selecting the option to update the invoice on the accounting system, Xero removed the option to edit an invoice after a partial payment has been made, meaning that late fees cannot be added or updated following a partial payment. An email will be sent to any users with the late fee notificaiton setting enabled if this occurs on any of your invoices.

Lock periods on invoices in Xero

After a lock period has passed, it is not possible to edit the existing invoice therefore no late fees can be added or updated. If an update failed due to a lock period, an email will be sent to any users with the late fee notificaiton setting enabled.

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