Late Deliveries Are Costing You: How to Enforce Penalties Consistently

The goods were due on Wednesday. They arrive on Friday afternoon, and the site team has already lost two days. Someone asks the obvious question: do we apply the penalty? Then comes the harder one: what exactly did we agree, and where is that written down?

If that sounds familiar, late delivery penalties are probably applied by memory and goodwill instead of by record. Here are four steps to make them consistent. For each one: what it looks like, why it costs you, and how WeManage Procurement handles it, step by step.

1. Write down the late delivery penalties before the first delivery

What it looks like. The delay terms sit in a signed PDF in one person’s folder. Nobody else can say quickly whether the penalty is a flat amount or a percentage, or whether there is a cap.

Why it costs you. Every late delivery reopens the same debate about what was agreed, and the answer depends on who remembers it best.

How WeManage handles it:

1. Open the Contract Profile and choose the LAD Type. LAD means Liquidated and Ascertained Damages, the agreed charge for lateness. You can choose Fixed Amount or Percentage.
2. For Percentage, also set the LAD Capped Amount. If you leave it empty, no maximum is applied.
3. Choose whether the penalty is charged on the Remaining Value or the Total Value of the contract.
4. Add the agreed wording in the Terms tab (optional) and the Key Clauses, so the text sits beside the numbers.
5. Submit the contract. The system starts calculating the LAD only after you submit it. It then shows the Accumulated LAD for you.

2. Verify what arrived, and on which day

What it looks like. A delivery is confirmed by a message in a chat thread. The date is whatever someone remembers, and the quantity is unclear.

Why it costs you. Without a confirmed delivery date on record, nobody can prove a delivery was late, so the penalty talk stops before it starts.

An example. A vendor delivers part of an order on Friday. Your officer checks the Delivery Order, sees the delivery date and the quantities delivered so far, and sends it back for rework because the date is wrong.

How WeManage handles it:

1. The vendor submits a Delivery Order against your Purchase Order or contract.
2. Where Delivery Order approval is switched on (it is off by default, under Application Setting), the approver opens the Delivery Order and checks the delivery date in the header and the items and quantities in the Items tab.
3. The approver responds: Approve, Reject (the vendor raises a new Delivery Order) or Rework (the vendor edits and resubmits it).
4. There is also a control on the money side: if the Delivery Order linked to an invoice has not been approved yet, the invoice approver can only rework or reject that invoice.

3. Raise the penalty from the record that shows the problem

What it looks like. The penalty letter is written from scratch in a Word template. The purchase order number, delivery note and invoice are typed in by hand, and sometimes the wrong ones.

Why it costs you. A penalty that cannot be tied to the exact order, delivery and invoice is easy for a vendor to question, and slow for your team to defend.

How WeManage handles it:

1. A Procurement Officer opens the related Purchase Order, contract, Delivery Order or invoice, goes to the Related Records tab, opens the Penalty sub-tab and clicks Add New Record. A penalty can also be created from the Penalty module. A penalty from a Purchase Order needs the order to be approved and accepted by the vendor, and from a contract needs it to be published or deactivated.
2. The officer fills in the header: a title, the vendor, the reference award, the Delivery Order and invoice if any, and a description.
3. The officer enters the proposed penalty amount and chooses the Type of Penalty, for example Late delivery (extension of time).
4. The officer picks a Resolution Method and a Penalty Settlement Method, such as deducting from the billable amount or a credit or debit note for adjustment.
5. Supporting documents can be attached. Documents marked external can be seen and downloaded by the vendor.

4. Let the vendor see the penalty, not just hear about it

What it looks like. The penalty goes out in an email attachment. The vendor replies by phone, and the outcome is never recorded against the order.

Why it costs you. Disputes drag on, and the next buyer who works with this vendor starts from zero.

How WeManage handles it:

1. The officer submits the penalty. There is no approval step, so the status moves from Draft to Received by Vendor.
2. The vendor finds it under E-Penalty and can open the overview, the details and any documents.
3. The penalty also appears in the Related Records of the order, contract, Delivery Order or invoice, so the next person sees the whole history in one place.

What if the delay is on your side?

Lateness runs both ways. The Penalty Issuer field lets you record a penalty from the buyer on the vendor or from the vendor on the buyer, and the Type of Penalty list includes Late payment, so the record does not have to be one-sided.

What’s next in the industry

Industry commentary on AI in e-procurement highlights emerging capabilities such as monitoring supplier performance and identifying delivery risks early. While these capabilities reflect broader market developments, they are not currently part of the functionality described in this article for WeManage Procurement.

Quick self-check: how many of these sound like your team?

• Nobody can say quickly what the late delivery terms of a contract are.
• Delivery dates are confirmed in chat, not on a record.
• Penalty letters are typed by hand and the references are sometimes wrong.
• Vendors learn about a penalty by phone or an email attachment.
• A late delivery was never penalized because the evidence was hard to find.

Two or more? Putting the terms, the delivery check and the penalty into linked records gives you a consistent answer when the next delivery is late.

See late delivery penalties handled in one place

WeManage Procurement links the contract terms, the delivery order and the penalty in one trail. Want to see it? Talk to the V-Work team through wemanage.cloud and we will walk you through a late delivery, from contract terms to penalty.