View Full Version : charging late fees
01-15-2004, 10:30 AM
we've discussed late fees, and intersest on past due accounts. my question is, how many of you guys actually have ENFORCED the late fees and interest, and how many times. and, how many clients have cancelled after recieving bills with late fees and interest?
01-15-2004, 01:36 PM
Why have late fees if you are not going to enforce them? If a customer leaves because they are late paying their bill, so be it. I don't have time for late payers.
01-15-2004, 01:55 PM
I have found that adding a late fee,in most cases has the results intended. I agree why have them if they won't be used.
01-15-2004, 02:03 PM
In the past I would tack on a late fee for certain customers. I seldom got paid the late fees, but could always count on recieving the check within the week. I once had a lady cancel service over a $5 or less late fee. She said she was offended that I would do that. I wanted to tell her how offended I was that she couldn't take a minute of her time to pay what she owes. I knew she couldn't have been busy because she had a house keeper as well as a nanny for the kids. Sent her a real nice letter trying to make her feel guilty.
01-15-2004, 02:43 PM
I charge and enforce late fees. I have never had someone quit because I charged a late fee, most businesses charge a fee. Most of the late fee usually just covers the hassle of sending another invoice/stamp/envelope etc. If someone sends me a cheque but not the late fee I usually don't worry about it.
01-15-2004, 03:44 PM
ok, so, if after adding a late fee,if the customer sends the money owed, but NOT the late fee, you WILL continue service? sounds to me like your giving an option, not a late fee. and that was actually my question. so i have only 4 replies, and half say they enforce late fees, and half say they add a late fee, but if they don't get it, no problem, which in other words is, you give an option. and i'm not bashing anyone, just trying to see if any REALLY AND TRULY enforces late fees. in my opinion, if you ENFORCE the late fee, it means it must be paid. personally i've never enforced the late fee, until the non payment resulted in termination of service. i'd like more replies, to see how many add a late fee, and DEMAND IT BE PAID.
DFW Area Landscaper
01-15-2004, 04:10 PM
Wouldn't it be nice if all of our customers who pay late would call and tell us that they are strapped for cash right now, but they intend to pay on such and such a date? Really and truly, I don't care if customers pay me on time as long as they eventually pay me. Problem is, the older accounts recievables get, the less likely they are to ever be paid.
I will be assessing both a finance charge and a hefty late fee for my new customers in '04.
I expect customers to call me, assuming they intend to pay me, when they get their bill with the $29 late fee. I'll be happy to waive the late fee as long as it's the first time it's ever happened. But I won't waive the finance charges. I'm not a bank.
The important thing is, I don't think a customer is going to call you and expect you to waive the late fee unless they are making a commitment to pay in full. But that's the idea. That phone call is important. If you get that call, you can continue service. Without that phone call (or payment), you need to suspend service.
Well over 50% of my customers paid me late at least once last year. That's because my late fees were too low. A $29.00 late fee plus finance charges ought to get my bill a little higher on the priority list.
Yes. I will waive a late fee. A late fee is a tool.
No. I will not waive a finance charge. I am not a bank.
DFW Area Landscaper
01-15-2004, 04:29 PM
you know dfw, if they would at least call and tell me they will be a little late, i'd be happy as sh!t! for me, a late payer doesn't neccesarily cause a financial burdeon, instead, the anxiety and uncertainty of wether or not i'm gonna see my money is the problem. and then there's the fact that i'll need to skip them if the bill isnt paid, therefor costing me more money. ok, so you WILL add the late fee, bit it's ok if they DON'T pay it? not tryin to be a wise azz, but isn't that kind of like telling an employee, "if u do that again, you'll be fired." and even when he does it again, you just threaten him, but never follow thru, it shows him you're full of cr@p. but i understand you don't want to risk losing a client, just cus they're late. better late than never works fine for me. for example, my contracts state that bills are mailed on 15th, and must be in my office by the 1st(16 days later). i have people who send it on the 10th, but, it's consistent, it's always on the 10th, and that's fine by me. i do believe, that if you enforce the late fee, you will lose the client. the only reason i believe that, is because we are considered expendable, and it's very easy for them to dump you, and look out the window, down the block, and find 3 other lawn guys they can choose from.
DFW Area Landscaper
01-15-2004, 04:49 PM
If a customer sends me a payment that includes everything but the late fee, and they never called me to ask that the late fee be waived, I won't waive it. The late fees are in my contract. I see no difference between not paying the late fee and not paying for a cut.
If a customer asks me once to waive a late fee, fine. I'll waive it. If they're asking me to waive the late fee a second month in a row, I'll have to play it by ear. The phone call is what I want in the first place because it should include a commitment to pay. The late fee is working if I get the call. But if it's gonna happen every single month, perhaps it would be easier to just let that customer go. I'll have to cross that bridge when I come to it. Right now, I really can't afford to lose customers. Hopefully that will change one day.
I'll have leverage with my new customers in 2004 that I didn't have in 2003 because all new customers will have already paid me for the last months' worth of service.
I've never had anyone refuse to pay a late fee in 2003. No one even asked me to waive a late fee in 2003. But my late fees were too light...2% of the balance per month. (FWIW: The guys on Lawnsite all told me last spring my late fees were too low...but did I listen? No. I hard to learn the lesson the hard way.) With a late fee that low, it just ensures that my bill is next to last (or dead last) on the customer's priority list.
DFW Area Landscaper
01-15-2004, 04:56 PM
I have never had a client discontinue service because of a late fee. If the customer does not include the addition late fee with their invoice it is added to the next bill and is paid. I will not bill a customer for just a late fee charge if I recieve the last invoice of the month late. Over the past 5 years I have averaged about 1% of the gross income in late fees.
01-15-2004, 05:36 PM
I can see you guys do not have a lot of commercial accounts. I'm not saying I get stiffed, but if i charged late ot finance charges I would be looking for alot of new customers. If I did residential I would probally charge the fees.
DFW Area Landscaper
01-15-2004, 06:17 PM
++++I can see you guys do not have a lot of commercial accounts. I'm not saying I get stiffed, but if i charged late ot finance charges I would be looking for alot of new customers. If I did residential I would probally charge the fees.++++
I do 100% residential.
Do you notice a lower percentage of uncollectibles with commercial accounts?
DFW Area Landscaper
01-15-2004, 10:16 PM
I enforce them. I charge $15, and no intrest, thats too much work to me for what its worth. Its on my estimate sheet that late fees will be charged, so i have always received them. If i didnt, i would keep the customer anyway. If someone calls to tell me they will be late, i dont chage a feeno matter how late they are. whunter is right, dont bother charging to a commercial customer, especially a national chain. Thye are always late, and wouldnt pay a fee.
01-15-2004, 10:56 PM
lawnman scott, you are also giving an option, not a late fee. you're saying that if they are late, you charge a late fee, if they don't pay the late fee, you will still keep them as a customer. sounds to me like you're looking for them to "voluntarily" pay the late fee, if they don't, there is no consequence. so in fact, you're not ENFORCING the late fee, it sounds like you are SUGGESTING it. which is fine, my question is does anyone enforce the late fee. what this means is, if they are late, you tack on the late fee. if they don't pay the late fee, you cancel thier service, and pursue it in court. that is ENFORCING a late fee. example: if i'm late on my credit card payment, they charge a late fee. if my minimum payment is $40, and i'm late, the minimum payment is now $55. if i send them $40, they tack on another late fee, cus the minimum payment was $55(due to the late fee, that they will make sure you pay). is anyone following me? having a late fee in the contract, and enforcing it(not as a customer option) are two different things
01-15-2004, 11:09 PM
Yeah, its pretty much there just to scare them, personally i dont want to lose a customer over $15. If they are really that bad of a payer, i will just drop them. To be like that, enforce it, no if ands or buts is stupid. I once received a check that was 6 months old. The envelope had footprints on it, was all dirty. She had insisted she sent it, and when she saw it didnt go through the bank she made me out a new check, then 6 months later, i get it.
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