late fee letter or clause with contract

Discussion in 'Business Operations' started by MOOSE, Jan 24, 2003.

  1. MOOSE

    MOOSE LawnSite Senior Member
    Messages: 393

    Hi, Guys. Did a search and found alot of useful info but not exactly what I want. I need a late fee letter or clause to include with contracts.
    I want to send a letter with contract or write a statement in contracts.

    What do you do and how do you word it. I'am very tired just like everyone else of waiting for my $$..

    All help will be appreciated.
  2. Turfdude

    Turfdude LawnSite Bronze Member
    Messages: 1,899

    Inyour contract,include a section for payment terms. Describe in detail when your late fee goes in effect and how it works. Until last year, we applied a 1.5% late fee per month on all outstanding balances after 30 days, and for each 30 days invoice remains delinquent (min of $1.00 per month).
    This year we have gone to a flat rate of $10 per month at 30 days after invoice date, and again every 30 days of delinquency.
    I can't stand late payers!

  3. viper88

    viper88 LawnSite Member
    Messages: 15

    This is what we have in our contracts;

    Late fees/checks: A late fee will be added at 2% per month, 24% per year for all invoices over 30 days from the date of invoice. $30.00 will be added to checks for insufficient funds.

    Payment: Payment is due in full at time of service or net (5) days after receipt of invoice on monthly billed yearly agreements. Yearly agreements require the first month payment prior to the start of service.
  4. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Messages: 8,745

    We have a policy that a minimum of $5.00 late fee, or 7% interest charge. Since putting it too work 3 years ago I have only had 2 people ever late for payment. It makes a big difference if someone has a $500 dollar bill and the interest will be $35.00.
  5. xpnd

    xpnd LawnSite Senior Member
    Messages: 378

    I have a flat $25.00 or 25% of the actual cash value of services rendred, whichever is greater late fee spelled out in BOLD Caps. (All customers are on a prorated payment plan) I agree it seems excessive at first however the highest fee mentioned so far seems to be 7%. 7% of $200.00 is only 14 dollars. Not much of a deterrent, punishment or motivator IMO. If the monthly invoice is $500.00 then it still is only a $35.00 late fee. Anybody that pays a monthly $500.00 invoice doesn't notice an additonal $35.00 either however $125.00 would probably catch their attention. A customer that comments about this fee is bluntly informed that I am an LCO not a banker. I don't make money letting cash sit on the table. I've done the work and I expect to get paid. I don't expect to always be paid first however I won't accept being last every month either. If you pay on time it doesn't matter what the late penalty is as it will never be charged. It filters out the customers that will ultimately pay you but will have you working hard a second time for money you've already earned. I bid every call I receive but I don't want to work every job I bid. 90% of my invoices are paid within 5 days. The other 10% have set up special arrangements for a different payment date but always pay within 5 days +/- of that day. Here is my collections statements:

    COLLECTION CHARGES: If the customer’s account is in default, the customer agrees to pay all collection charges we actually incur in the collection of the amounts that you owe under this agreement (including the charges of any collection agency to which we may refer your account). In the event the account is referred to an attorney, the customer agrees to pay all charges and expenses, including reasonable attorney’s charges and court costs, to the extent permitted by actual law.

    DELAYED ENFORCEMENT: (Insert Your Company Name) failure to exercise any of our rights when you are in a default status does not mean that we are unable to exercise those rights later. (Insert Your Company Name) will not loose any rights under this agreement if action is delayed for any reason. (Insert Your Company Name) will accept late or partial payments marked “payment in full” or with other restrictive endorsements without loosing any of our rights under this agreement.
  6. Tim Canavan

    Tim Canavan LawnSite Member
    from Houston
    Messages: 218

    I'm with Turfdude. Ten dollars every month until payed. Service is cut off after three consecutive non payments. If they finally do pay and want service again they get charged an up front cleanup fee for getting their out of shape lawn back in shape. If not, the hell with them.
  7. 5) Chronic late payments and/or repeated lack of access can result in the loss of open billing status and/or termination of service. The entire account balance becomes due upon service termination or loss of open billing status.

    6) Overdue payments will result in the posting of a $10.oo late fee to the account. A $15.oo fee will be charged on all returned checks. In the event of collection proceedings, customer will pay all actual collection expenses plus 18% interest on the outstanding balance.
  8. Equipguy

    Equipguy LawnSite Senior Member
    Messages: 370

    Have the customer pay in advance with a ck or cash. Even better sign up with your bank or one of the many other credit card companys and take credit cards. Saves a ton of time and on billing and you get your money on the same day every month.
  9. KirbyKLC

    KirbyKLC LawnSite Member
    Messages: 31

    My due date is the 7th of every month. My invoice states "payment not received by the 10th of the month will incur a late payment fee of $20"

    As far as checks returned; "If your check is returned by your bank for ANY reason, you will be charges $50.00 PLUS any fees charged to us by our bank"

    By making it hurt, hopefully it will deter them.

    BTW I almost forgot, if it gets to 30 days we start charging 2% in addition to the $20 monthly late fee.

    $20 doesn't seem like a lot, but the majority of my accounts are small lots that pay anywhere from $75/mo to about $150/mo.

    $20 late fee on $75 bill = 26.667% interest

    $20 late fee on $150 bill = 13.333% interest
  10. scott's turf

    scott's turf LawnSite Senior Member
    from NH
    Messages: 949

    I used to do a flat $10/month but found it counter productive to a few customers that paid their bill on time but not in full. Say they owed $800 and they paid $600, should they still get a $10 late fee? And if I give them that late fee they might as well have held on to the money untill the next bill came along. So now I do a 5% or $5 min. Just got my last payment of the season yesterday in which they had accrued $50 in late fees. The late fees for the year usually cover my stamps and postage. Occasionally someone will complain but I have only had one person refuse to pay it. When I got their check without the late fee I discontinued service.

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