Late fees - Legalities

Discussion in 'Business Operations' started by 1MajorTom, Mar 16, 2007.

  1. 1MajorTom

    1MajorTom Senior Moderator
    Posts: 6,073

    I hear a lot of people on hear talk about late fees and how they use them.
    We never have in all the years implented a late fee as we have very few late payments. However, with all the new customers we have been signing up last year, and I foresee this year, I would like them to know from the beginning that there will be a late fee charged if they decide they are just going to send in their payments when they feel like it.
    How do I go about doing this? I'm sure I just can't charge what I feel like?
    Legally am I only allowed to tack on a certain percentage?
    I've looked online for late fees in Pennsylvania, but couldn't find anything.

    I just want to know what I'm legally allowed to charge.
    Anyone?
     
  2. TKO Landscaping

    TKO Landscaping LawnSite Member
    from NJ
    Posts: 45

    I will just charge a $10 service fee, if I have to send more than one invoice.
     
  3. CLARK LAWN

    CLARK LAWN LawnSite Silver Member
    Posts: 2,526

    dont know about PA but in Ohio all you can charge is 18% annual or 1.5% per month and it must be clearly maked on the invioce.
     
  4. 1MajorTom

    1MajorTom Senior Moderator
    Posts: 6,073

    that's great, that's the info i'm looking for, but how did you find that out for your state? I want to be able to verify this so I know exactly what I can charge for Pennsylvania.
     
  5. HGT INC

    HGT INC LawnSite Member
    from MI.
    Posts: 19

    In Michigan I charge 1.5%, with a min. of a $5.00 intrest charge. If their a good customer and its a rare late payment, I wave it. Most will pay it, but the ones that complain, I either jack up the price the next year or drop them. I will get a few that will pay the last bill of the season late, thinking that they can get away with it. Same thing for them the next season. If they cant pay on time, what good are they to you?. Not sure of the legality protion, but been operating this way for over 25 years.
     
  6. CLARK LAWN

    CLARK LAWN LawnSite Silver Member
    Posts: 2,526

    i found it from my aunt who a cpa i'll ask her what it would be underwhen i see her
     
  7. 1MajorTom

    1MajorTom Senior Moderator
    Posts: 6,073

    Clark Lawn:
    Thank you very much, i've been trying to search this, but I'm not coming up with anything solid.
     
  8. HOOLIE

    HOOLIE LawnSite Gold Member
    Posts: 3,981

    I haven't found anything specific for Virginia either...I think as long as it's spelled out on the contract you are OK to an extent...I'm sure there must be some sort of upper limit??

    I know my storage facility charges an $11 late fee if it's over 10 days late, then they charge an additional $25 if it's over 20. The office is busy on the 20th of each month...:laugh:
     
  9. General Landscaping

    General Landscaping LawnSite Senior Member
    Posts: 801

    There may be an interest cap, but a late fee is'nt based on interest. I've had a $2 balance go unpaid on a credit card; and got hit with a $29 late fee.
     
  10. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    Here's Va's legalities:
    You can charge as high of a late fee as you can justify in court, should the customer decide to take that route, there exist no upper limits but you have to be able to account for it so don't make up a number. Also before you tack it on, the customer has to be informed of the fee (and the amount) some kind of way, I usually give at least 2 weeks notice on this.

    Other notes:
    In just over 5 years I have yet to collect one full late fee but I do send the balance through collections nowadays.
     

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