View Full Version : did i just screw up?
04-02-2002, 11:28 PM
ok late month i sent out a notice to all my old customers that had been paying their bills via regular mail a notice saying they would now have to pay a 7.5% late fee as opposed to a 5% late fee which they had been subjected to if they were late with their payments. when all my customers start service they are told and sign an agreement saying they understand and accept the billing terms and conditions. however i recently added into my agreement and put on the notice that i would now have a minimum late fee of $5.00... bills just went out for the first time since i issued the notice... so far i have recieve a call from a very good customer who always pays his bill but it's always about 10 days late... he told me if i didn't retract this policy (atleast in regards to him) that he'd have to look for business elsewhere... i told i'd waive the fee this month and change his due date to a day later in the month... what should i have done differently?
04-03-2002, 01:19 AM
He just might be yanking your chain to see if you'll back down on your late fee increase seeming how he's always late with his payment. Stick to your price. If he doesn't like it, drop him.
04-03-2002, 04:31 AM
no reply, just wanted to say its nice to see someone close by, being not to many people on here from California:blob3:
04-03-2002, 04:54 AM
You should stick to your policy. It's ok to offer him a later due date to meet his pay period, but if he is still late after that then he deserved to pay the late fee. Now, I haven't had this problem but if a customer that is always on time and just made a mistake is late and get's hit with the late fee for the first time, calls me and says what's this I don't think it's fair that you charge me extra, your fired. I would then tell her to ignore the late fee that it was a accounting error that I would have never make my favorite customer pay a silly late fee, Please except my apolligy.
It's not worth loseing the good ones over it. But he is probly the reason you put the policy in effect in the first place.
04-03-2002, 06:54 AM
You should look at his payment history before you charge him a late fee, maybe this is when he gets a check. I have one customer that told me her husband gets paid on the 15th and that's the check they pay bill with............I always get it on the 16th-17th of every month.
Look for consistency, there may be a reason he can't pay like you want him too.
04-03-2002, 07:21 AM
I saw in a recent post, a comment about late fees being un-collectable unless you are a banking institution. There was a couple of news wires attatched to the post about big business paying back millions in late fees . One I think was a cable company, which had collected late fees for years, and was forced to pay the monies back. I have not talked to our cpa but I will find out more asap. I have never been able to charge a late fee without teaing someone off. Go figure. :blob4:
04-03-2002, 08:03 AM
Hey , when you are late with your mortgage payment or phone bill, or any other bill for that matter do they care NOT.... If you know you are getting a bill and have made the commitment to pay it in a timly manner then regardless of when you get your paycheck the money should already be alloted from the proevious check or what ever.. It's called Budgeting... Maybe he should take a class.... Do you think He calls the phone company and says.. Hey.... Retract your late fee or I'll go somewhere else.. I dont think so... He just knows he can get away with it , cause he thinks we are some lame unorganized group of turkeys with pick up trucks... Well that s gotta change ... Stick to your policy.. I think the best way to do it is to charge a fee like $25.00 for late payment with an additional charge of 2.5% per month for outstaning balances there after.... Thats what the big boys do , so why cant we... Just have to check what the max allowable rate is for late fees , here it is only 2.5%...... That may be what the earlier post was talking about as for payig late fee money back.. It has to be a reasonalbel amount.... But They cannot , NOT let us make intersest on lost money.....
the option of late fees wouldnt work for me.the customer would just wave the next lawncare truck that came along down.
they wouldnt have to wait long.if u get my meaning.
04-03-2002, 09:22 AM
Originally posted by HOMER
You should look at his payment history before you charge him a late fee, maybe this is when he gets a check.
Look for consistency, there may be a reason he can't pay like you want him too.
Right on Homer...I do the same thing with my personal finances. Each has it's time it gets paid. Once you get in the cycle it is hard to break.
04-03-2002, 12:30 PM
That's a tough call. Personally, I am a hard ass when it comes to paying on time. I will get rid of chronic late payers, even if it's only 10 or 15 days late. My mortgage, payroll, bills, are all due at the beginning of the month. If I let a lot of people pay me late then I can't pay my bills on time. And if you let one, you gotta let another......And a few years ago it was just like that. Every month I was letting 20-40 people slide on paying on time and I was having to pay MY bills late. It sucked.
So I implemented a hard line payment policy, even harsher than yours. First step was $10 late fee. Next step was telling chronic late payers they either had to sign up with our AutoPay program or we'd cancel their service. Final step was to sign all new clients up on AutoPay. And I took no prisoners. I was FED UP with people paying me late.
I had a guy who was just like you describe. Always paid me but it was always 10-15 days late. I told him I was sorry but I needed everyone to pay on time, not late. He said he'd take his business elsewhere and I let him. We've done just fine without him.
Now, the only people we work for are people who sign up with AutoPay or people who have a proven record of paying on time or early. And it's worked wonders. Almost no accounts receivable problems anymore.
At least in my area, there are plenty such customers. I don't have to work for the late payers. My goal is to get the most QUALITY customers I can get and leave the problem customers for my competition.
04-03-2002, 12:41 PM
I am with Homer I look for concistincy. If he pay about the same time every month then I just expect it at that time every month. I had one customer that would pay every other month for some reason but I could expect his payment every other month. I am not that anal about payments if they are paid at the same time every month. Look at it this way at least he is paying you every month. If he is a good customer like you say then I would let it go.
04-03-2002, 01:03 PM
I mow for one of my aunts, and every month her payment is late. Every month I charge her a late fee. Every month she pays it! What tees me off is she can afford to go to auctions and spend money for antiques, but can't pay her bill on time. So I get a little extra. . . for nothing. However I continue to maintain her yard because she does pay her bill, it's just late. I would say as long as he's paying the bill, before the next ones due, don't worry about it. Just don't let him get behind, more often than not the longer the bill is let go, the harder it will be to get your money.
04-03-2002, 02:12 PM
I think changing the billing cycle for the guy is a good idea or give him a 10 day grace period.
I saw in a recent post, a comment about late fees being un-collectable unless you are a banking institution. There was a couple of news wires attatched to the post about big business paying back millions in late fees . One I think was a cable company, which had collected late fees for years, and was forced to pay the monies back. I have not talked to our cpa but I will find out more asap. I have never been able to charge a late fee without teaing someone off. Go figure
Comming from the Cable Industry and having to build the program to reimburse these fees, this is an easy one for me. The court ruling on this was that the Cable companies picked a number out of the thin air (Most were $5 if it was late). This fee had no foundation. When pressed, the cable companies could not come up with a formula that could calculate the fee that they were charging (interest lost on the $$ + direct cost + profit). This got them in court. I think the 5th Circuit ruled on this originally, that the fee had to be factually based and not usuous in nature. When you calculate that the fee was $5 on a $30 monthly bill (or 17% per month) and the cost per account was around a $1 to $1.5 per account to collect. Here is quick math $5-$1.5=$3.50; $3.50/30=12% that is attributable to finance charges 12%*12 months = 144% and usury laws typically kick in at greater than 25% (unless you are Uncle Loanshark). By the way, I believe the ruling was a partial reimbursement but with fees, and damages, etc it worked out to a full refund. Also, they wised up and inflated collection costs so they could still charge the $5.
Moral (I AM NOT A LAWYER THIS IS OPINION ONLY) make sure you can support your fee. I beleive you are entitled to finance charges and cost recovery for collection. Make sure it is legit and you have the backup behind it, I imagine it will be fine.
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