View Full Version : Heres why we should charge late fees
08-29-2000, 08:11 PM
I was listening to talk radio today and they were talking about Blockbuster videos late charge. If you were to rent a hot off the presses video and it came back a day late, they would charge you the equivalent to a 5 day rental fee. By doing this Blockbuster rakes in an additional (are you ready for this) SEVENTEEN PERCENT extra per year.
In smaller terms If I made 35K this year, nearly 6k would be from late fees. I dont know about you guys and gals but Im adding this next year.
That leaves one question. Some threads have read that you can only charge upto a certain percentage to be within the law. Is this true? If so tell "big blue" otherwise Im adding $5 to all late bills.
I am all for late fees. I will be placing a $10 late fee on all bills that are not paid with-in 15 days. This will go into effect next pring.
I give my customers 30 days to pay. I only had one constantly late paying customer last year. And this year I raised his price,$3 per cut, to make up for his tardyness.
08-29-2000, 08:34 PM
The demographics I serve and those served by Blockbuster are totally different consumer groups.
If you can increase your income by 17% by charging late fees, I'LL MATCH IT! :)
I have found that in my business it is easer to charge 10% more and give a 10% discount for payment in 10 days. When I have tried late fees they just don't pay it. (I am not in lawn care. I am a self employed mechanical designer.)
08-29-2000, 09:10 PM
As much as I would like to charge late fee's, I would loose about 75% of my business. Why? As long as other maintenance gardners don't do it, I realy can't do it. Second, It is illegal to charge a straight across late fee call it a late fee in California, however, I can charge interest and I do. (22% per annum, min of $.50) This reduces just about all my late payers.
08-29-2000, 09:35 PM
Late fees don't work here. Unless you have it in your contract with the customer a late fee will probably not be paid (most of our accounts are non-contracted). Blockbuster can do it because of the agreement that you sign for membership..thats why they have your credit card number. Customers who don't pay on time are really not good accounts and should be continued for the year, but the next year increase price or drop the account all together.
08-29-2000, 10:06 PM
You will always get the no-payers. Every one has there own method of late charges, ours are in our contracts 30 days late 5% intrest and stop services until paid. It has worked for us because they signed the contract!!! As a matter of fact we have 2 companys known for not paying landscapers ( found out after 3weeks in the contract ) you have a contract they have no feet too stand on if you forfilled your part of the contract. But remember everone has a different way of billing.
Ideal Landscaping Co.
08-29-2000, 10:08 PM
Personally, I would rather have all my money w/in 30 days than worry about late fees.
All but maybe six of my customers pay within seven days. The remaining six, they get a phone call after 21 and the money is here before the next bill goes out.
Bill, you have the best home page on the web....Bink
08-30-2000, 07:56 AM
Its nice not to charge late fees, and on the contracting side of things we don't have too many problems with late payers. We do have contracts for all of our lawns though, and each customer signs the agreement which states the terms and conditions of their account. That is, if over 30 days, 18% interest per annum, plus fees for collection. We had our lawyer review the terms to make sure we were ok. Most of the time, the late fee only applies to commercial work, or sometimes just to give a homeowner a kick in the rear.
Before this policy, we had a small claims case that we won, with interest and fees. Then, the defendant claimed he was sick the day of trial, and re-opened the case. The judge told us that since he didn't sign the terms (this was a verbal contract from a few years back)we were only entitled to money for the work we did, no interest, no fees. The judge reduced our court collection judgement from $ 600.00 down to about $200.00. The guy paid the next day, though.
My point is, if you have the time to call customers for money, or if your customers are so perfect, then good for you. But, what really counts is what's written, and if its legal. I used to know all of my customers too, and for years I cut 100 lawns with just me and a few helpers, with all of the customer's balances in my head. Furthermore, at that time, most customers kept an envelope on the mantle with my name and my money it. We used to not have too many problems back in the day, but I didn't plan to cut all the lawns myself or know each customer personally ad infinitum. Otherwise, instead of installing landscapes and selling supplies, I'd still be mowing lawns. Now we do a lot of commercial work, and ultimately pick up jobs for people who we do not know. We might do work for someone who shows up at our nursery looking for a job to be done. All jobs (for the most part), get estimated on paper, with a signature, big ones pay a deposit, and sign the agreement, and then the work gets done. Go through the hassle and/or cost to make sure what you do on paper is correct, don't just arbitrarily set up a late fee.
On the supply side (we have a re-wholesale nursery called Soundview Landscape Supply, too), each account signs a credit application, spelling out our terms and conditions. This one has a lot of fine print which was reviewed by an attorney. Then, with each transaction, customers (landscapers) sign a ticket (receipt), which restates some of the pertinent terms. This has been a good year for receivables, since most guys are doing ok due to a strong economy. However, it never ceases to amaze me that some guys who are generally credible, pay the finance charge on overdue balances to me, then stand at the counter and complain about not getting their bills out, or which customer they have been cutting for and mulching all season who hasn't paid them. These guys will carry the customer all season, for no finance charge, then probably reduce the customer's bill for cash at the end of the year. I've told some of these fellows that this poor business practice costs them money, but it takes a while for that to get through to them.
I once heard something that goes like this:
There was a guy cutting down a tree, sawing like crazy, but getting nowhere and wasting time because the saw was dull. He couldn't be convinced to stop and sharpen the saw because he didn't have time, he was too busy cutting down the tree.....Don't be that guy!
08-30-2000, 04:28 PM
I tried this a few years back when the same people kept paying late. They just ignored the fees and still paid late. Now I call to find out if there's a problem; if they still don't pay, I just cut them off. They WILL call to find out why you haven't come to mow. Also, if a cut was missed, I bill them for that also. Any chronic late people have that added cost increase added to their fee. I've only taken one person to court, and they had it continued 3 times. It's not worth the headache.
Might work on residentials but all of my commercial accounts take 60 days to pay instead of 30 for residential, ive it a shot, but I agree check laws in your area.
08-30-2000, 09:04 PM
Every "new" customer "has" to sign a contract and it is worded that if they're payment isn't received by the 10th of the month I have the option to "impose a $10.00 late fee, withold service, or upon written notice cancel service" in addition to having the option of sueing them. I've been doing this for 11 years and guess what - I don't HAVE any deadbeat customers, period.
08-30-2000, 09:43 PM
I dont punish people by not cutting their gr*** on time. If you are late getting their you are punishing yourself. The gr*** gets high and you have cost yourself a cycle of cutting their yard. So they save money unless you charge them extra for high gr***. I just waite until they pay me and never go back if they are a cronic late payer
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