This is nothing more than a modern debt-collection agency.

That may not be an entirely bad thing, though. I can just see it getting out of hand if this is not done correctly.

Don't be so quick to write it off as just debt collection that could get ugly for your clients.

It's also equivalent to a payday loan with an APR of ~38.7%!

Still, though, for chronically late clients that you want to fire anyway, it might be a great alternative to waiting.

I've found it really effective to invent an in-house, debt collection agent. Usually named Boris, Thor or Moose. He contacts late clients directly from our billing dept, and is a little more insistent than I'd been up to that point. Whether the delinquent client takes him more seriously, or just finds the whole process humorous, I don't know, but it works.

They're not as bad as the loan sharks at pay day money shops, but 4% commission is still a substantial chunk.