For those who charge LATE FEE'S

Discussion in 'Business Operations' started by Soupy, Oct 29, 2005.

  1. Soupy

    Soupy LawnSite Gold Member
    Posts: 3,125

    Say you want to charge a $5 late fee. Do you charge this to each invoice that is unpaid, or just to the last one sent out?

    We invoice once a month and it isn't uncommon for someone to have two invoices out at one time. I even have one that has 3 invoices because they were canceled the first week of the 3rd month. Should I be adding $5 a piece for a total of $15 each month.?
     
  2. Frontier-Lawn

    Frontier-Lawn LawnSite Silver Member
    Posts: 2,949

    for me i charge $15 each month that they have a bal thats not paid.
     
  3. beck

    beck LawnSite Senior Member
    Posts: 433

    I have a 10% late fee after 30 days and a 2% finance charge after 60 days.
    I have one customer that is always late which is nice because I am charging $25 but with the late fee it turns into $27.50
     
  4. Soupy

    Soupy LawnSite Gold Member
    Posts: 3,125

    Does anyone have experience on Illinois law as to how much we can charge, or how it needs to be worded. I asked my Accountant if $5 a month was legal and she just replied that she knows so and so charges that much. She didn't really seem to have a definite answer. I tried to google it, but I get a bunch of law concerning banks and other lending institutions.

    I believe the interest charge is 1.5% each month for a total of 18%. But i'm not sure how the flat fee thing works exactly. Most my monthly invoices are in the $120-$450 total and I believe $5 will work better then a finance charge. I'm not looking to gouge anyone. I have some that always pay, but are a few days late. I know all the utilities companies have a very small late fee if paid after the due date. I think they are using the 1.5% charge.
     
  5. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Posts: 8,745

    Last time I checked the highest annual late fee that you can legally charge annually is 18%, and that is for an corporation. If you are not a corporation you can only charge approx 7 to 8% a year. Like I said, that was about 3 years ago, so I don't know if it has changed since then. Now there are some ways around it though.
     
  6. premierlawncare

    premierlawncare LawnSite Member
    Posts: 91

    I charged late fees to a few of my customers. They just sent the balance without the late fee. One called and said she is not going to pay it. This is why all of my new accounts are pay in advance and contract , or no service. I am not working for free again.
     
  7. Green-Pro

    Green-Pro LawnSite Bronze Member
    Posts: 1,420

    Our late fees build that is if August invoice for $32.10 is unpaid, sept invoice will reflect unpaid amount plus 5% plus new invoice amount. Oct and it is still unpaid, August + the 5% + Sept + 10% on top of that + new invoice. After that its to Judge Wopner we will go.

    As far as the amount I would suspect there is a cap on the amount you can charge, I've never checked. I would further argue that with most states, unless you are outright robbing people you will have no trouble with tried and traditional methods of late fee penalties. J my .02

    I should add with our last invoice we sent out a late fee policy related to billing and one thing I tried to add to that is that the lines of communication are important, if you are experiencing financial problems let us know so we can work out an equitable solution.
     
  8. gardenkeeper88

    gardenkeeper88 LawnSite Senior Member
    Posts: 347

    Just my .02. First off make sure you have it in the contract what your policy and charges are for late / unpaid balances. Then if they don't want to pay the late fee like one of my customers. at the end of the year I send a copy of that page w/ thier signature and the late fee policy highlighted, and a statement showing all the charges and payments of the year with the balance highlighted and they pay it. 2 yrs now. They just think they are above all this. I have let some (not many) slide $1-3 not worth the hassle. I have added it additional labor on some extra work that I've done for customers. sometimes even the next year. But I always try to recover it.
     
  9. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    I've never collected a late fee, either... Same experience as yours, the customer pays the balance due lol, so I've learned to use the late fee to GET them to pay when I think I might get stiffed, it's a method works thusly:

    30 days overdue - Send a 2nd invoice with the note: prompt payment avoids late fee.
    60 days overdue - Send 3rd invoice with a hefty late fee (I do 35, 50, or 75 dollars, it don't matter anyhow) and the note: prompt payment avoids legal action
    This USUALLY gets me paid, but so does playing Mr. Kodak.

    But it's not very nice and there are times when I am not sure if it's a problem, meaning the customer appears to be of good will, then the 2nd time I come out to cut the grass/service the yard (well SOME of my customers have me out there every 3-4 days sometimes the bill adds up faster than the mail would carry the check) THEN if I get nervous after a few weeks, I put the note - prompt payment ensures continued service (which is nicer than the bs with the fee) especially for high rollers, for lack of better words.

    That's how I get paid sometimes, but no, no late fees collected to date and it frustrates me so it's No check / No Cut : I'll cut the grass before you pay but if you don't pay, service is discontinued... We got a guy here local won't even drop the tailgate unless payment is under the mat / inside the screen door / whatever if it's not there, he goes on without servicing the yard. To me that used to seem a bit cold but today I can understand why he does it... Me, I'm ok with 200 dollars unpaid services for the year, hope it doesn't go any further because anything approaching a whole percent frustrates me (imagine that).
     

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