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View Full Version : Late Fees, do they work?


bignamelawncare
08-04-2010, 02:30 PM
Well cash flow is a real issue for us. We mow for the month, then send the bill on the first of the new month. I don't bill for stuff I haven't done yet. I don't want to complicate things. This year I added a line on my invoices about a late fee. Still had some people not pay on time. So I issued late fees of $20.

Had one guy already call, he "refuses to pay a late fee". I said "fine, no problem just send me the money you owe me and we're good."
He said the check was on the way.

Had one lady cancel her service.

DitchDr
08-04-2010, 03:43 PM
Payment is due by the last day of the month. If it is not in my bank by the 5th, your cut off and have a 20 dollar late fee untill we get paid. Call me ahead of time and i will work it out, but flat out not paying or not talking forget it.

NO PAY=NO MOW

kodak mowing
08-04-2010, 05:19 PM
i tried it that way before,it was a big hassel so i only mow monthly for a few select customers who have been with be for a while,theres to many people out there who knowing well never pay,but i do have alot of people i mow then call or text,and they mail a check,no check no mow.

MJS
08-04-2010, 05:32 PM
5% late fee after one month, + 10% more after two. Services cease after 60 days late.

Works like a charm.

ed2hess
08-04-2010, 06:32 PM
5% late fee after one month, + 10% more after two. Services cease after 60 days late.

Works like a charm.

Phoeeee....this is just another way to lose customers. They could tie you up in your shorts trying to stay on top of who owes what and when did they pay and how much. A $100 bill that is late by one month only cost YOU about 50 cents. You tell me....is it worth that to ride herd on people.

stan the man
08-04-2010, 06:40 PM
mowing i have only account that i had the problem getting my money he gone plowing season is the problem getting my money from some accounts i have a lot account that make 3 payments for the hold year of service

dgw
08-04-2010, 06:46 PM
put in your contract that you use collections

people like their credit

Roger
08-04-2010, 07:11 PM
There are many threads like this that discuss "adding a late fee." But, rarely does anybody ever say they collect a late fee. I think most are like the person cited above, "pay what they owe, and call it good." As somebody also stated above, keeping track would be a nightmare if you have a few late payers.

I am presuming this OP is concerned with typical residential mowing work. If not, then discount what follows. If the OP is speaking about large dollar volume work, such as design and installs, high material costs, then the situation is different.

As I stated in anther recent thread on this topic, remember your services are not the only game in town. If somebody gets irritated with you about nickel-dime fees, they can easily move to the next person for their mowing needs. Reading LS threads, it sounds like most of us have many other LCOs standing in line, waiting to take our customers for any reason. The customers know this. If an LCO wants to be difficult, then why wouldn't the customer just move on to another contractor? Don't get me wrong. I want my money just as much as another contractor. And, I'm counting on the integrity and honesty of the customer to pay their bills. But, I also know that if a contractor makes like just a little difficult, and the customer knows there are many other choices, their decision is a no-brainer. None of us bring anything unique to the marketplace. None of us are in a leveraged position. Sorry, don't use the late fee system of other vendors (e.g. credit cards) as a basis. We are not the same at all.

meicher806
08-04-2010, 07:38 PM
Yup we charge a late fee and we stick too it. If customers are not paying on time there could be the chance I cant pay something on time thus resulting in a late fee for me on my bills. We pay our bills on time so I dont have any late fees but why should i be out money because they didnt pay when they were supposed to, and furthermore werent nice enought to call and let me know what is going on. Money gets tight some times I understand that. I have it in my contract that i have the right to charge a late fee, I also have the right to waive said fee if you call me and let me know what is going on.

On a side note. I have a customer that is very very slow to pay. I did work for them 2 years ago now, their bill never goes down because they only send me $25 every few months. your right i am going to charge interest.

Glenn Lawn Care
08-04-2010, 07:46 PM
They work for me without problems! I only issue them to new clients. My clients that are rich I do not!

I use to have a $20 late fee after a certain date but I changed it 1.5% of their monthly bill and it works great!

Roger
08-04-2010, 08:11 PM
... I changed it 1.5% of their monthly bill and it works great!

Meaning what?

MJS
08-04-2010, 09:08 PM
Phoeeee....this is just another way to lose customers. They could tie you up in your shorts trying to stay on top of who owes what and when did they pay and how much. A $100 bill that is late by one month only cost YOU about 50 cents. You tell me....is it worth that to ride herd on people.

Well, I could possibly be considered lucky, as in nine years I've only had to do this twice. Both times the customer paid in full and apologized. . . All of my regular accounts are aware of the policy and stay on top of all payments.

If there is ever an irregularity with payment, I always call and make sure everything is okay and they realize the situation. I only send late fees and warnings to those who are uncommunicative.

I'm definitely a people-pleaser. . . just have to know when to put my foot down.

bignamelawncare
08-04-2010, 10:15 PM
ROGER,

I'm not trying to be a jerk but man you really are selling yourself short.
I can tell from your post you're a smart guy. I'm 100% certain that you offer something to your customers that Billybob and his drunk brother can't.

CJCuttingEdge
08-07-2010, 03:31 PM
I went through hell last year with people not paying so now:
Require a 5 cutting deposit if your lawn cost $40 then you pay $200 upfront which is held untill the final invoice then credited back

NO they are not paying their first month up front it is strickly a deposit
I still work a month and then send out invoices

ONLY 1 customer dropped me because of it this year
If they are 20days past due their service is terminate
If they are 1 day past due their service is susspended

THEY HAVE GOT THE POINT FINALLY
I SPENT ALL WINTER IN COURT LAST YEAR COLLECTING DUES! NOT DOING IT THIS YEAR:)

ed2hess
08-07-2010, 06:36 PM
They work for me without problems! I only issue them to new clients. My clients that are rich I do not!

I use to have a $20 late fee after a certain date but I changed it 1.5% of their monthly bill and it works great!

I do agree with this approach...we do about the same. Some people seem to like floating the bill along and if you have a reasonable amout they wont question it. Only problem is if they set up auto pay and the amount is jumping around that doesn't work right?

CJCuttingEdge
08-07-2010, 06:52 PM
As far as charging a $20 late fee I believe it is illegal in the first place-per my accountant

The max is 1.5% of the amt due

I would rather drop the customer get my $75 termination fee plus any amount due in COURT and let the cut throat companies compete over them, kills 2 birds with one stone....I get rid of the annoying dead beat customer and I help contribute to a cut throat jack ass closing his business because they can no longer afford to stay open:)
MEAN BUT THE TRUTH _ TAKE IT HOW U WILL

Richard Martin
08-08-2010, 07:03 AM
As somebody also stated above, keeping track would be a nightmare if you have a few late payers.

I use a dedicated billing program, not a hybrid program that attempts to be a billing program. It's called FF Billing Manager Pro (www.mrtec.com) and it does a whole slew of pure billing functions. Handling late fees is easy whether it's a flat fee or interest based.

yardguy28
08-08-2010, 07:48 AM
i'm trying something new this season.......

i've changed my payment terms to due upon receipt (instead of 15 days) and after 15 days if i haven't seen payment service is suspended. after 30 days over to a collection agency.

late fee's might be a great motivator for some but if someone intends on stiffing you they aren't gonna care about you charging late fees.

ernieknows
08-08-2010, 06:59 PM
I suggest letting all your customers know you expect post-dated cheques.
Total # of cuts at per cut rate divided by # of cutting months.
That makes it simple for both you and the customer. Of course that works best when I supply references so they know I am not going to take their money and not perform quality service for them.

TSB group
08-09-2010, 10:51 PM
Are you guys serious? You really charge people up front like a gym membership? Really? Are you doing more than any drooling idiot can do on a mower? I would get dropped so fast here it wouldn't be funny!

I have slow payers, when they get home the day I was supposed to mow and see it now done I get a call, I then tell them I moved them to the end of the list, and I am met with cash when I show up the next morning. All is well after that.

yardguy28
08-10-2010, 06:55 PM
As far as charging a $20 late fee I believe it is illegal in the first place-per my accountant

The max is 1.5% of the amt due

I would rather drop the customer get my $75 termination fee plus any amount due in COURT and let the cut throat companies compete over them, kills 2 birds with one stone....I get rid of the annoying dead beat customer and I help contribute to a cut throat jack ass closing his business because they can no longer afford to stay open:)
MEAN BUT THE TRUTH _ TAKE IT HOW U WILL

either its different in your state or your accoutant is full of sheot.

a late fee can be as much or as little as you want. most people i know use a $20-$25 late fee.

i know one guy in the business who uses a either a $20 or 10% whichever is larger late fee.

Are you guys serious? You really charge people up front like a gym membership? Really? Are you doing more than any drooling idiot can do on a mower? I would get dropped so fast here it wouldn't be funny!

I have slow payers, when they get home the day I was supposed to mow and see it now done I get a call, I then tell them I moved them to the end of the list, and I am met with cash when I show up the next morning. All is well after that.

yeah i can't see invoicing up front. people don't want to pay for something they haven't gotten yet. i know i wouldn't tolerate this from an lco trying to service my property. i treat all my clients how i would want to be treated and paying up front is definitley NOT something i would do.

MR-G
09-10-2010, 10:15 PM
We have a pretty simple system in place for ALL customers....when they call for service the first time, we give the estimate and if they agree to our terms they also are required to open a "billing account" with either a credit or debit card number to be kept on file and used each month for their payment...we e-mail a statement at the end of the month(snail mail is 2.00 more)stating the charges and fees for their service....we also at that time run the credit/debit card.....their payment posts to our acct within 24 hrs....and yes , we are charged a small fee for accepting the cards...but well worth the money not to have to bill,wait,chase and beg for our money....for customers that dont want to open a billing acct...well we just say thats too bad...we wish them luck and ask them to call back if things dont work out....we would love your business but this is our policy......150+ residentials and NO collection problems....commercial accts are not req"d to pay this way...but some do anyway as it is much easier for them as well.....btw...the fees we encounter are built into our pricing...