View Full Version : Late Fee
Just wondering if any of you guys charge a late fee. I started charging this spring and have already collected $637.00. I can't beleive I didn't do this sooner. I bill the first of the month for the last months mowing and give them till the 15th to pay, after that the late fee kicks in.
08-28-2000, 07:13 AM
You must have some big accounts or a lot of late payers. Tell us what your doing, because your doing something right. :) We only have one late payer, but they always pay. Sometimes they get a month or 2 ahead, so we don't worry about it.
08-28-2000, 09:13 AM
That is a lot of money.
We spend more time assesing the fee and than deleting it from the accounting program (Cuz they seldom pay it anyway)
I'm not in the business of accessing/collecting late fees and I won't keep customers that pay late.
After looking over the accounts it seems to be the same one's that are paying the late fee. It must not bother them to pay an extra 15 to 90 dollars every month....As long as they pay I love it.....
08-28-2000, 09:47 AM
That makes sense.
Collecting $3 from 15 customer....
Soumds like i have to start chargin a late fee.
08-28-2000, 09:06 PM
this year started a using a 15 dollar late fee. It amazes me how the same people month after month are late and pay the late fee... do you think theyd learn the first time? its also funny how some of my strictly mowing customer who dont have the money for add ons dont mind paying a late fee month after month. I made quite a bit of money from late fees this year too.
Evan, Your right about the same customers paying the late fee. You mentioned you charge a flat 15.00 fee, I charge 15 percent of the total bill. I started this just to incourage my customers to pay on time which most of them do, but the one's that don't seem to be willing to pay the late fee which in turn has in the long run made me more money.
08-29-2000, 07:54 AM
Please be aware that there are laws governing late fees which vary from state to state. Some states have no laws and some are heavily regulated like Maryland. If in doubt check with your local States Attorney. They would be the experts since they would be the ones coming after you. All it would take would be one complaint and you could end up oweing thousands of dollars out to your customers and paying huge fines. I've seen it happen.
01-15-2002, 01:00 PM
Richard or anyone else..
I was thinking about a flat fee of $10. Do you know what the % is for Maryland?
01-15-2002, 07:20 PM
We charge a $10 late fee to any account not paid by the due date. I need some way of getting their attention before I cut them off. We bill $300-400 per year in late charges. It pays for the amounts I have to write off as uncollectable. All collection problems start out as slow payers. Fortunatly 90% of our customers like our work and show it by paying on time. Accepting credit cards has helped reduce the late payments and improved cash flow at the first of the month.
01-15-2002, 10:14 PM
We charge $35 as a late fee.
This month, several were late. 1 customer's check arrived 5 days late and she included the late fee in her check. I don't have to put it on her next statement.
I hate getting paid late, but the late fee makes it tolerable.
01-16-2002, 01:53 AM
$35 late fees will definitely get their attention, I've been trying to balance getting paid while avoiding alienating customers. One competitor charges $20, and gets it. We seem to be the only two in the area doing it. A high fee isn't out of line when it is a cronic problem payer, but it seems harsh for the first time. I guess the people that appreciate you, know they cause problems by paying late, so pay the fee to be able continuing with the quality of service they are receiving.
01-16-2002, 12:09 PM
We've been charging late fees for about 3 years now - we mostly assess them in the off season when we're trying to clear the books of all outstanding balances. If we don't recieve a payment by the 15th of each month, there's a $25 late fee and a 2% (monthly) finance fee. We started out with just the finance fee years ago, but it wasn't a big enough incentive to get them to pay (Big deal $4 for a $200 balance due). The late fee of $25 has been very effective for us. A lot of slow payers have started to pay a lot better. Check with your state laws though - there are some legalities. At any rate, we end up taking in about $6,000 - $8,000 a year in late fees and finance charges. If you're gonna have to work to collect your money, you might as well pay yourself to do it! We also use a collection agency for those that we can't get at all. Their success rate is low (10-20%). They charge 40-60% - BUT they do get money that we otherwise probably would never see and it does give me some sense of satisfaction to hand over an account and know that , if they aren't gonna pay, at least I can ruin their credit.:)
PS - We do suspend the late charges/fees for some customers (good customers/elderly/handicapped) - as long as we know they're making an effort - or that they have a good history with us.
01-16-2002, 12:34 PM
6-8K? that is a lot of slow payments. Sometimes I wonder if I am too tight with credit? The 3rd time a payment is late, or if the payment is 2 weeks past the due date I suspend service. If I do not get paid within 10 days after suspension I will resume service only if I am paid by check for the remainder of the year, or am given a credit card to process before each mow. Is anyone carrying these people all year and just continuing to add late charges, then hoping to collect at some point. I try replace them with new customers, but by July or August there are not so many prospects. Collection agencies have not provided satisfactory results, so I use the winter to collect on my hard cases. I end up collecting on about 3 out of 4.
It's encouraging to see you are having success with late payments.
This is the first year I'm including a late (service charge) in my agreements. I have a lawn maintanance biz only (mowing, trimming, mulching, leaf clean up).
They way my agreements work is that the customer pays 8 equal payments for April-November. Their first payment is due April 1st. I deliver an invoice as a reminder on about the 21st. If their payment is not received by the 5th of each month I charge a $25 bill.
I hope I don't collect a cent this year in late charges.
01-17-2002, 07:19 AM
That $25 late fee really shakes a lot of money lose from customers that otherwise would be really slow about paying. If there's little or no penalty for not paying your bill - trust me, it'll go to the bottom of the pile very quickly. Since we've started collecting late fees/finance fees, we've only gotten very limited complaints from customers about it. These are usually the customers that we're planning to drop anyway - so who cares. The assesment of late fees also gives you a real good collection tool - many times I've told a customer that I'd suspend all late fees and finance charges if we could pick up a check for the full amount right then. You'd be surprised how many accounts that were previously trying to spread payments our over 3 months can suddenly come up with $500 to save paying all their late fees, etc...
I really recommend some type of penalty/fee for late accounts. It'll help you get your money faster - but use it judiciously, it can also alienate good customers.
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