Late fee?

[Joe Diaz]

At the beginning of this year we increased our late fee to 5% a month. Our thought was the higher late fee will encourage people to either pay on time, or perhaps worry about paying a bank or cc late fees rather than us.

We usually don't have a huge problem with our clients paying on time, for many projects we require down payments, payment on pickup, etc... but once in a while we get someone who will take months to pay their final bill. In all honestly if those clients were having financial issues, and they were to contact us, we could work out some sort of arrangement.

But this particular client has been a real pain. Months after the bill was sent out, we hadn't heard a word, we just go through the regular motions, send out notices, then new bills tacking on the late charge. They finally pay.

However, right before paying they complained about a paint issue on an office sign we made for them years ago. Someone had, I assume, recently duct taped something to a sand blasted sign-foam sign, then removed it tearing off some of the paint. They accused us, saying we used tape in the "manufacturing process" and years later the paint is now "de-laminating" <- his words. He wanted us to touch up the sign for free. It was almost as if they were using this as an excuse for paying so late on their most recent job.

They didn't pay the late charges however and complained about our rate in a rant filled letter. As if we are the problem because they can't pay their bills in time. I'm assuming they won't pay the charges. We are sending out another notice today.

What's your late fee rate?

 

[J Hill Designs]

'we used saws and drills in the manufacturing process as well...doesnt mean you can drill into the sign and i will fix it...'

 

[Joe Diaz]

'we used saws and drills in the manufacturing process as well...doesnt mean you can drill into the sign and i will fix it...'

Oh we will totally fix it. However, in this case, not for free, especially after being accused of creating a "faulty" product, when someone clearly duct taped something to the bottom of the sign. If I were to guess a banner ad of some sorts. Two pieces of tape in the bottom corners of a post sign, what else could it be?

We have no reason to use tape like that on a sandblasted sign during the "mfg process". They were just scrambling for excuses not to pay. It was kind of a half witted lame excuse if you ask me.

 

[wildside]

we charge 1.5% interest per month with a $5 minimum fee

i have noticed most will pay immediately after seeing the fee, and most do not pay it, but it got them too pay

once particular customer was out about 7 months, with us sending the monthly invoice with the fees added, and then finally sent the first collection letter

they paid immediately without all the late fees and interest, we went ahead and tacked on more interest and sent the bill again as being short paid so was still past due, ended up going to court and cost them alot more to just pay their own late fees - didn't loose the client either, now the bookkeeper there don't like me, but she is no longer there anyway, and the owner apologized to me for the lateness and understood we had to do what we had to do...... we weren't the only one this bookkeeper was doing this to either

 

[Jane Diaz]

I wanted to send a nasty letter back in response but we decided not to...

 

[Joe Diaz]

Yeah, I'm not real worried about losing this client. We've done some nice jobs for them, but they have always been a hassle to deal with and are always complaining about our prices. This instance is strike 3. We keep track of all this in our bookkeeping and this is the third time it has taken months for them to pay. IF they do come back, our three strikes policy says that they need pay in full, in advance.

 

[signmeup]

Yeah, I'm not real worried about losing this client. We've done some nice jobs for them, but they have always been a hassle to deal with and are always complaining about our prices. This instance is strike 3. We keep track of all this in our bookkeeping and this is the third time it has taken months for them to pay. IF they do come back, our three strikes policy says that they need pay in full, in advance.

You are wise beyond your years Joe.

 

[Joe Diaz]

You are wise beyond your years Joe.

Thanks, but that policy isn't my idea. My folks came up with that one. I'm the bastard that dare charge 5% though. :Big Laugh

Hey if you can get a lower rate through your bank or on your credit cards, use them to pay your bills on time, We don't want to be left holding the bag because people can't pay on time.

I mean really. Who here hasn't paid a bill late before? but you don't whine about the late fees you pay. That's just how it is. Suck it up. You made a mistake. Move on.

 

[Gino]

Do you have this 5% thing printed on your quote AND your invoice ??

Some places it is against the law to charge a late fee, if not properly displayed beforehand.​

Our quotes and invoices....anything to do with the numbers part of a transaction has... A service charge of 1-1/2% per month (18% per annum) will be added to any amount over 30 days old.

We also have a portion that states our terms. In there you can put whatever terms you like, however, it must follow business etiquette to some extent. You can't say 50% down w/30 days balance or we'll charge you an extra $500 or some outrageous amount. It must be normal terms.

Now, that being said, you can also do a term of your choosing.... 1% 10 net 30, 2% 15 net 30 or whatever.

So, many, if not most companies, if offered a discount MUST take advantage of a discount. Many larger companies are set up this way n order to save the company money. If it comes in at the 30 days, you can now re-bill them and they will be forced by law to pay that amount.


A company that we've had as a customer for nearly 30 years was always behind in their payments. We were always re-billing them until they told us to avoid this back & forth stuff.... just put a 1 or 2 percent discount and they have to pay within our terms. We have another customer for over 25 years..... we simply put across their invoice, Your invoice already contains your 10% discount and they pay immediately. The good part is.... we don't have any such discount in there.... we just say it and then they pay it.

 

[Malkin]

We haven't charged late fees simply because of the hassle of trying to collect the fee afterwards if the don't pay it along with the original amount.
It would probably help encourage some to pay on time though...

 

[tattoo.dan]

We are debating trying this now. We have way too many outstanding bills

 

[Jane Diaz]

All our invoices, estimates and statements say:
"5% monthly interest charged after 30 days - 60% Annual Rate
$5.00 minimum charge monthly."
We used to have 2%/24% annual but we raised it this year to "encourage" faster payment. These people have done this THREE times now and we have been generous the first two times and waived the late fee when they ignored it. THIS time I received the payment 2+ months late and sent the a bill for the remaining late fees that they neglected to pay.

 

[wildside]

5% a month is highly excessive

i remember we had ours at 2% for awhile and our attorney said 1.5% is standard operating procedure for this country and courts know it

 

[Malkin]

5% a month is highly excessive

i remember we had ours at 2% for awhile and our attorney said 1.5% is standard operating procedure for this country and courts know it

I don't disagree with you...

However most of us do not offer "credit" so much as convenience billing. We aren't in the business of loaning out money as to make a profit on the interest. We expect to be paid on time.

 

[Joe Diaz]

Update: They just paid it off using their card.

5% a month is highly excessive

I'm not suggesting everyone here do 5%, but I was wondering what other people are doing. It was a decision we made. If our rate is less than their banks interest/late fee, or credit card interest/late fee, you better be sure they would rather deal with a small business holding on to their debt than the banks. And so they do.

Normally our customers pay right on time or right before the 30 days when we send out a notice, especially since for most jobs over $500 a 50% deposit is required. But the customers that don't pay, seem to make a habit out of this. We have found that a large percentage of clients that don't pay within the 30 day period often times take several months more to finally pay. A large percentage of those that take longer than two or three months to pay usually pay only after the threat of court or collection agencies is brought up. This is unacceptable. As I said earlier a simple phone call or email to make payment arrangements if they are having financial problems is fine. We can usually work something out. Everyone else? Pay me my money! (in my best mobster voice.)

This client is a great example. Because in the past they have taken even longer to pay. This increase in rate seems to have gotten their attention.

 

[SignManiac]

My late fee is generally repossession!

 

[Joe Diaz]

My late fee is generally repossession!

And that right there is another reason for the increase. In a lot of cases. We can't legally take back a sign or remove graphics if a client doesn't want to pay.

 

[CanuckSigns]

And that right there is another reason for the increase. In a lot of cases. We can't legally take back a sign or remove graphics if a client doesn't want to pay.

And even if you could, what good is a sign that says "Bob's Sandwich Shop" you can't put it back on the shelf like at Wally World!

 

[Mike Paul]

And even if you could, what good is a sign that says "Bob's Sandwich Shop" you can't put it back on the shelf like at Wally World!

Because they already invested in the initial deposit. Better to make the final payment then to start fresh w/ another shop.

 

[EricRamse]

we charge 1.5% interest per month with a $5 minimum fee

+1 and we're usually only around 3% of accounts past 60 days due

 

[signswi]

Not sure how my day job handles late fees but consulting I do 3%. Late fees should at least cover prime plus a point or two otherwise you're lending them money for free. I actually haven't ever had to use it though.

Carrots work better than sticks though, discounted early payments get better results than penalties on late payments. I offer a 5% discount on payment received within 5 days of billing for large projects.