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Late fee

Discussion in 'Business Operations' started by Mowgli, Jun 23, 2006.

  1. Mowgli

    Mowgli LawnSite Member
    Messages: 183

    I want to charge late fee, but i don't event know where to start.
    Who do call to find out what % is legal What % is not?
  2. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    Nono, a late fee needs to be the fair amount of money you are compensated for chasing said money in the first place. Thus, a late fee can be any amount but you need to be able to justify it dollar for dollar, and rest assured a high late fee will not work.

    I recommend an amount somewhere between 30-45 dollars or so. I have used 75 dollars before but I will advise you that with a really high fee most customers end up paying the initial amount due without the fee (so if the bill is $100 + 75 for the late fee = 175 but they pay only $100), the good news is with a high late fee it scares them more but the bad news is, you never get paid late fees.
    So, 30-45, you decide what is fair for you, how much time you spend chasing, etc, etc.

    As for %, legally you can only charge up to so much / year, somewhere in the range of 12-18% APR, to be safe I would go with 12% APR which is 1% / month.

    Then if they still do not pay, you go to olddebts.com and they have packages for you to select, for a low volume collections issue (2-3 a year or so) I would recommend Instant Collect Package for $6.95 +$3 credit record +$1 NCOA = $11 you pay.
  3. MMLawn

    MMLawn LawnSite Gold Member
    Messages: 3,569

    NO.....Mr. BadAdvice it cannot!! :dizzy: :dizzy: Each State has Usery Laws that state the max amount that, late fees, return check fees, and interest rates can be.
  4. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    Yes but then in virginia it can be any amount, however, unlike a state where you can be sued for being an idiot, here in virginia if you can not ultimately justify your fee then they can put you in jail for fraud... But yes, if you can somehow justify 200 dollars for a late fee, then you're fine with it but I did say a high late fee likely would not work.

    So it really doesn't matter, either you exceed your state's max or you can not justify how you came up with it, either way you're in deep trouble so what is the difference? I said you needed some method were you were sure your fee was on target... Now as for what the laws are in your particular state or how you go about coming up with this fee, I could really care less because it boils down to right and wrong, and not per state specifics.
  5. dKoester

    dKoester LawnSite Gold Member
    Messages: 3,346

    I'll talk with my brother he's a high ranked officer with the city of Norfolk. 23.99 % per year. Federal Law
  6. MMLawn

    MMLawn LawnSite Gold Member
    Messages: 3,569

    He's wrong then. The fed's only set Usery rates on Federal Backed loans and Interstate Transactions (credit card, etc). What he has given you is the State of VA's Usery Law on INTEREST, not a Federal Law.
  7. dKoester

    dKoester LawnSite Gold Member
    Messages: 3,346

    :waving: Ok thanks for the info.

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