absolutely penalties are appropriate. If you are not able to automate the billing through credit cards or another electronic payment system, a late fee is appropriate. If a customer has no penalty, they can easily abuse it. If its clearly spelled out in the agreement and then when they are late the first time and you remind them and give them a warning, they will be much more prompt the next time. Automated payments are prefereable, then you don't need to worry.
Yes, in my opinion - there isn't anything wrong with late fees or penalties. Just make them reasonable and make them clearly disclosed and agreed upon by customers.
If possible, give them a warning on the first infraction but hold your ground on subsequent ones. Remember - you are running a businessn and have bills of your own to pay. How gracious would your data center or NOC be if you were always late on paying YOUR bill?
Your customers need to show you the same courtesy and learn that there is a consequence if they pay you late all of the time.
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