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View Full Version : why is the late fee really there?


bobbygedd
08-27-2005, 12:08 PM
is the late fee there to persuade them to pay on time? is it there to recover expenses incurred for reminder letters and phone calls? or is it there as a means of making more money from the client? right now, i have a couple of clients who pay a flat monthly rate. they are habitually late, which means thier grass goes uncut, they are charged a late fee, and no refunds are given for missed services. in a nutshell, thier habitual late payments have caused them to pay 3-4 times the regular rate for a grasscut. here is an example: the bill is a flat $130 per month for grasscutting. thier payment is not recieved on time. i don't cut the grass UNTIL the payment has been recieved, plus, a 3% late fee. if the check doesn't come until after the 3rd week in the month, i'll cut on the 4th week, but they have to pay the full months service, plus the late fee. so there are some months i get paid $135 for one grasscut, which was originally priced at $30 per mow. so then, what is the true purpose of the late fee?

TURFLORD
08-27-2005, 12:25 PM
I only have 1 customer at this time that's a later payer. Owes like 6 months. They slowly make payments missing every 3rd month or so. They will eventually catch up or SCC papers will be filed when my patience runs out. I run Q-Books software and they get hit with 1 % finance charge. I'm smart enough to account for these types of customers in my own monthly expenses. So why a late fee. 1. Because they annoy me. 2. Because I can. 3. I get charged late fees when I don't pay on time, Why should they be special.

nobagger
08-27-2005, 06:18 PM
Late fees...lets see we use them for scrub customers. I enforced it last week and two days later guess who calls, the scrub customer,"oh I'm sorry honey Iv'e been out of town, yada yada yada. Ive heard this all season from her so I finally got sick of it and charged her a 10% late fee. Picked up the check with payment in full that night. Her sister is next on my list! Those are the only ywo I have any problems with.

mcwlandscaping
08-27-2005, 07:00 PM
Man it is like i have three clients that must be related. All three pay extremely late (once over 8 months late). I am going to start adding a late fee because it is getting rediculous. I havn't recieved a payment from either of them yet for anything since spring. "Oh, i sent a check, it must have gotten lost in the mail" or I'll have one ready next week" another "I have been on a long vacation so ill get your money to you soon" one more, "I can't find my check book, ill have to pay you next week." Dam that stuff pisses me off. THATS WHY WE NEED LATE FEES. Hope using them will straighten them up. One question though, on the bill do you write, "Late fee" or just add it in with out mention of it? Thanks! Also, if someone has an example of a professional bill that i can take a look at that would help too! Thanks.

nobagger
08-27-2005, 07:01 PM
Man it is like i have three clients that must be related. All three pay extremely late (once over 8 months late). I am going to start adding a late fee because it is getting rediculous. I havn't recieved a payment from either of them yet for anything since spring. "Oh, i sent a check, it must have gotten lost in the mail" or I'll have one ready next week" another "I have been on a long vacation so ill get your money to you soon" one more, "I can't find my check book, ill have to pay you next week." Dam that stuff pisses me off. THATS WHY WE NEED LATE FEES. Hope using them will straighten them up. One question though, on the bill do you write, "Late fee" or just add it in with out mention of it? Thanks! Also, if someone has an example of a professional bill that i can take a look at that would help too! Thanks.
Oh it says in big bold letters "LATE FEE"

dvog99
08-27-2005, 08:01 PM
i usually ad a 20 dollar late fee. if it go to 2 months with out payment, i send out a final bill that instructs them that all service have been stopped and you must contact me to resume service with full payment plus late fees.that usually works.

christoff
08-27-2005, 09:05 PM
is the late fee there to persuade them to pay on time? is it there to recover expenses incurred for reminder letters and phone calls? or is it there as a means of making more money from the client? right now, i have a couple of clients who pay a flat monthly rate. they are habitually late, which means thier grass goes uncut, they are charged a late fee, and no refunds are given for missed services. in a nutshell, thier habitual late payments have caused them to pay 3-4 times the regular rate for a grasscut. here is an example: the bill is a flat $130 per month for grasscutting. thier payment is not recieved on time. i don't cut the grass UNTIL the payment has been recieved, plus, a 3% late fee. if the check doesn't come until after the 3rd week in the month, i'll cut on the 4th week, but they have to pay the full months service, plus the late fee. so there are some months i get paid $135 for one grasscut, which was originally priced at $30 per mow. so then, what is the true purpose of the late fee?

If I'm not mistaken, 4 cuts at $30 is $120, whats the added $10 for? beer, gas? dump, fill us in

bobbygedd
08-28-2005, 09:32 AM
If I'm not mistaken, 4 cuts at $30 is $120, whats the added $10 for? beer, gas? dump, fill us in
it's the way the payments are broken down. each month DOES NOT have 4 weeks, it has more.

lawnman_scott
08-28-2005, 10:35 AM
If I'm not mistaken, 4 cuts at $30 is $120, whats the added $10 for? beer, gas? dump, fill us in
So by your thinking there are 48 weeks in a year? You may want to rethink things, unless you like 4 weeks unpaid vacation throughout the year.

Precision
08-28-2005, 01:41 PM
Man it is like i have three clients that must be related. All three pay extremely late (once over 8 months late). I am going to start adding a late fee because it is getting rediculous. I havn't recieved a payment from either of them yet for anything since spring. "Oh, i sent a check, it must have gotten lost in the mail" or I'll have one ready next week" another "I have been on a long vacation so ill get your money to you soon" one more, "I can't find my check book, ill have to pay you next week." Dam that stuff pisses me off. THATS WHY WE NEED LATE FEES. Hope using them will straighten them up. One question though, on the bill do you write, "Late fee" or just add it in with out mention of it? Thanks! Also, if someone has an example of a professional bill that i can take a look at that would help too! Thanks.
Are you nuts.

I have one client that is overdue by 3 weeks. His service has been suspended until payment is recieved and my clients pay one month in advance.

Precision
08-28-2005, 01:45 PM
Late fees (when appropriately high) are designed as a deterent, then as a punitive action and lastly as a method of compensation for the extra work involved.

When late fees are stupidly low, then they only act as a way of making additonal income, but the decreased certainty of cashflow and increase in labor to collect are much bigger than the fee associated.

Being very low on the priority list, I use the late fee / lein option to get higher in the pecking order when people hit hard times.