Late fee?

[earplug]

Joe, one little problem with your 5% charge. It is illegal in Illinois. You can only charge a maximum of 9% per annum.

From USLEGAL.com

Chapter 815 of the Illinois Compiled Statutes governs the rate of interest in the state of Illinois. Section 815 ILCS 205/1 prescribes the maximum rate of interest upon a loan or forbearance of money, goods, or things in action as $5 upon $100 for one year. Section 815 ILCS 205/4 prescribes a rate of interest of 9 percent per annum in all written contracts. Contracts providing for a higher rate of interest are void. Section 815 ILCS 205/5 prohibits any person from accepting or receiving any greater sum or value for the loan than which is permitted by the provisions of this Chapter.

 

[Joe Diaz]

Your link is talking about interest rates for loans and lending. We are talking about late fees not loans. We don't loan money or products to our customers. 9% per annum would be .75% a month. Every business I know in Illinois would be breaking the law if they could charge no more than .9% per annum on late fees.

 

[earplug]

Here is more

815 ILCS 205/2

[Creditors rate; after money due]
Sec. 2. Creditors shall be allowed to receive at the rate of five (5) per centum per annum for all moneys after they become due on any bond, bill, promissory note, or other instrument of writing; on money lent or advanced for the use of another; on money due on the settlement of account from the day of liquidating accounts between the parties and ascertaining the balance; on money received to the use of another and retained without the owner’s knowledge; and on money withheld by an unreasonable and vexatious delay of payment. In the absence of an agreement between the creditor and debtor governing interest charges, upon 30 days’ written notice to the debtor, an assignee or agent of the creditor may charge and collect interest as provided in this Section on behalf of a creditor.

815 ILCS 205/4

General interest rate
Sec. 4. General interest rate. (1) Except as otherwise provided in Section 4.05 [815 ILCS 205/4.05], in all written contracts it shall be lawful for the parties to stipulate or agree that 9% per annum, or any less sum of interest, shall be taken and paid upon every $ 100 of money loaned or in any manner due and owing from any person to any other person or corporation in this state, and after that rate for a greater or less sum, or for a longer or shorter time, except as herein provided.
The maximum rate of interest that may lawfully be contracted for is determined by the law applicable thereto at the time the contract is made. Any provision in any contract, whether made before or after July 1, 1969, which provides for or purports to authorize, contingent upon a change in the Illinois law after the contract is made, any rate of interest greater than the maximum lawful rate at the time the contract is made, is void.

 

[Joe Diaz]

Again, those don't apply to late fees. That whole section is about interest rates. Are you reading them?

 

[Jane Diaz]

And there is NO fee IF they pay their bill on time!! THAT'S the point!!
Try paying your credit card bill or your electric bill late and see what THEY tack on!

 

[Jane Diaz]

off my credit card statement:
Late Payment Warning: If we do not receive your Total Minimum Payment by the date listed above, you may have to pay a late fee of up to $35.00 and your APRs may be increased by the Penlty APR of 29.99%.

 

[Gino]

Obviously, we have a failure to communicate here.

These are our terms............. Capish ??

 

[earplug]

After talking with my accountant today I stand corrected concerning the legal % rate for late fees.

However, they are not as easily enforceable as just putting it on the invoice. There needs to be a contractual agreement in place stating what the terms of the sale are including the late fee provisions. With the Credit Card example you agreed to the terms (contract) when you signed up for the card.

 

[Joe Diaz]

After talking with my accountant today I stand corrected concerning the legal % rate for late fees.

However, they are not as easily enforceable as just putting it on the invoice. There needs to be a contractual agreement in place stating what the terms of the sale are including the late fee provisions. With the Credit Card example you agreed to the terms (contract) when you signed up for the card.

A signed invoice will work. It acts as a contractual agreement. In other words, it states our terms/prices/qty... etc. They agree to those terms... voilà... contractual agreement. Well, at least it holds up in court in our neck of the woods.

Trust me Earplug. It's all on the up and up here at our shop. We didn't open up the doors to our business yesterday.

I realize 5% is higher than average. But as stated before, that is kind of the point. Also I'm not saying I would recommend that exact number to everyone. But I do think that if you are having problems getting clients to pay on time, raising your late penalty is an option to consider. Now what you raise it to, I don't know. Different strokes for different folks.

 

[Jane Diaz]

One of the times I had a customer not want to pay, I took him to small claims court. The judge asked about the situation, I showed him the invoices and numerous statements I had sent, told him how long I had been waiting for payment, etc. Then he looked at the guy and asked him for his story. They guy hemmed and hawwed about why he didn't pay. The judge said "did they do the work for you?" He had to agree. And the judge said "Pay the woman!" And then he added that the guy was also libel for the late fees AND the court costs! So by the time the judge was done with him he had almost doubled the original bill. I LOVED IT!

 

[gnubler]

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.

Bumping this old thread.

I have an invoice that just hit 30 days. The job was completed, customer said he was thrilled with the signage, and then promptly went radio silent after I sent the invoice requesting balance due. Finally heard from him a few days ago via email, stating he's out of the country and will have his assistant get it paid asap. I presume that's code for "check's in the mail". In my last email I mentioned I'd have to start charging interest once it hits 30 days, but didn't specify any terms. Evidently that got his attention, but still no payment has been made. I don't have any terms printed on my invoices and have never had to deal with a rogue customer like this.

What's the best way to handle it at this point? Should I add some late fee language to my invoice from here on out?

 

[2B]

Yes, add terms for BOTH late payments and also have terms for accounts that are sent to collections

Here is a general guideline, make sure the amounts are legal for your area
It is agreed that each payment not received within the stated terms are considered PAST DUE and are subject to bear a service charge of XXXXX% per month not to exceed XXXXX% per annum.
This amount will be added to the open balance owed on past-due accounts.

 

[Pauly]

I would have a term in the contract stating all signage installed etc etc etc will remain the property of (your sign shop) until full payment has been made and cleared.
We have the right to enter and remove all signage if payment hasn't been made with in X amount of days from install date.

Etc etc.

If they haven't paid, you remind them about this.
If they think your joking, rolll up and prepair to remove it.

You'll see payment in your account quicker than you can find your Cordless impact driver.

 

[Geneva Olson]

payment upon completion avoids the late fees.

 

[gnubler]

I would have a term in the contract stating all signage installed etc etc etc will remain the property of (your sign shop) until full payment has been made and cleared.
We have the right to enter and remove all signage if payment hasn't been made with in X amount of days from install date.

Etc etc.

If they haven't paid, you remind them about this.
If they think your joking, rolll up and prepair to remove it.

You'll see payment in your account quicker than you can find your Cordless impact driver.

Pretty sure this has been discussed elsewhere on the forum, and could open up a whole set of legal issues. Trespassing, etc.

The job is question was vehicle decals, pretty big job. They ain't comin' off.

 

[gnubler]

Yes, add terms for BOTH late payments and also have terms for accounts that are sent to collections

Here is a general guideline, make sure the amounts are legal for your area
It is agreed that each payment not received within the stated terms are considered PAST DUE and are subject to bear a service charge of XXXXX% per month not to exceed XXXXX% per annum.
This amount will be added to the open balance owed on past-due accounts.

Thanks. Can anyone else chime in with the correct verbiage that you use?
I'm also going to talk to my accountant to see if he has any suggestions and verify the legal percentage rates.

 

[WildWestDesigns]

We have the right to enter and remove all signage if payment hasn't been made with in X amount of days from install date.

Be careful here, depending on the jurisdiction, may not be as clear cut as one would like to think. In your example, going and removing signage, in some jurisdiction when something is affixed to say a building, it could be consider a part of the building at that point in time and belonged to the owner of said building. Which may or may not be the person that owes on that bill. Also depending on jurisdiction, if one wants the protection of being able to repo an item that hasn't been paid for, can't use colorful language like "emergency repair" (I'm not saying that that was stated here, just something that I have noticed people having done, or saying that they did it (I have seen it on some emails that I have gotten as well)), it would have to be explicit that it is a repo and stated as such in the contract (at least in some jurisdictions).

What's the best way to handle it at this point? Should I add some late fee language to my invoice from here on out?

I'm reading this as if there was nothing about this in the contract that your current customer has for this job. If that is correct, I would be leary about trying to do so retroactively, when they didn't agree to it at the beginning of the job. They may not have gone with you if the terms that you are listing to them now that they are responsible for, but they didn't even know were on the table before hand.

Personally, I'm more of the remaining payment remitted when project is completed. None of this nonesense. I'm not someone else's bank. I find that the headache that that saves far better compared to the potential computers that I may have lossed that deal with net 30, or whatever.

 

[Stacey K]

If you don't have anything in your contract/estimate then you just need to continue harassing them. Show up at the business, mail invoices, email, etc.

Payment upon completion for every job just doesn't seem possible, or maybe I'm just too lazy to wait around for people. Like Tuesday, I had a vehicle to letter and didn't finish up until almost 7pm. I was not about to hang around and wait for this guy to pick his kid up from football practice and swing over to grab his truck to get paid. I sent him the invoice the next morning and assume I'll get paid.

I put a ton of smaller jobs in my pick-up area for customers to grab after 4 when I close - again, I'm not sitting around waiting for people. They are ALWAYS LATE. I have a mail slot for payment or email the invoice for electronic payment.

Most people are good about paying. I had one tavern that almost didn't pay me about $2500. I went there and sat at the bar and said I'm not leaving until I get paid. I got paid. After he closed up I found out he owes many other businesses thousands of dollars and I'm talking like 20k to just one. I'm glad I took the time to sit there so I got paid.

 

[ChicagoGraphics]

You can also tell your customer you need to have full payment within 5 days or however long you want to give them otherwise I will take you to small claims court.

I use that on customers that like to take their time on paying, once they hear the word "court" they seem to pay very quickly