Nobody collects them. In fact, we've heard from our legal counsel that even if you have them in your contract they can be very tricky to collect. So let's back up. Why do we care about late fees? Because we want to motivate clients to pay on time and mitigate the risk of killing cashflow, or of not getting paid at all.
But late fees are a bluff. We cannot mitigate the risk of financial ruin with bluffs.
The solution must be more structural than that. Specifically, we retain the ability to stop working if we stop getting paid. We set custom thresholds on our balance track in Tidy. These thresholds represent how much financial risk we are willing to take on our clients. If we have a lot of trust built up with a client, we are less afraid of their financial risk, and allow them to carry a negative balance. If we have trust issues, we set their minimum balance to a large positive number, and require large deposits.
If you can negotiate for it, deposits are best case scenario. Deposits essentially mean that your client is pre-paying for work, and you can maintain a positive balance with them. If they stop paying, you stop working. Not as a punishment — as a natural consequence. You eliminate one of the most foundational kinds of financial risk for agencies.
Tidy makes this effortless. Retainer balances are tracked automatically, clients can see exactly where their deposit stands, and you never have to send an awkward "just following up on that invoice" email again.