There are lots of ways to ensure you are paid on time, being wholly unreasonable is not one of them. The key is to ensure that the invoice doesn't go overdue. Outline the consequences of late payment (work stoppage, no code delivery, no handover) at the beginning of the relationship, and work on terms that both sides are happy with. Tie payments to solid deliverables and send reminders. Bring hardcopy invoices to signoff meetings; if they don't pay it there and then, reschedule the signoff.
As an aside, I don't think your abusive penalty would be enforceable (in the UK anyway).
If they were in the initial contract, I think it can still hold:
"You can calculate the interest payable on overdue bills by taking the relevant reference rate and adding 8 per cent.
Alternatively, you can set a contractual rate that may be higher or lower than the statutory rate. If you set a contractual rate, the statutory rate no longer applies"
Interesting. The ability to charge a late fee is guaranteed by the Late Payment of Commercial Debts (Interest) Act 1998 which sets the statutory rate. Even though you could set significantly higher rates in your contract, the client might have remedy under the Unfair Contract Terms Act, where the supplier would have to show that the late fee is reasonable in relation to the damages sustained by late payment. Late payment is a breach of contract, so late fees have to be in line with the actual damages caused by that breach.
It wouldn't.
For a start, it sounds like this term is might(?) be listed in the invoice? But, even if it wasn't, it would most likely fall afoul of "consequences of a breach" and "unreasonable terms" of Unfair Contract Terms Act 1977.
All the same, however, that doesn't necessarily mean that he can't include it.
Not only that, but terms on an invoice don't form part of the agreement for the work and are not enforceable. The invoice is issued post-work and hence post-agreement. The caveat is if you include pertinent terms from the existing agreement on your invoices for informational purposes.
As an aside, I don't think your abusive penalty would be enforceable (in the UK anyway).
I would never agree to your terms.