Late Fee's

Discussion in 'Lawn Mowing' started by Willmow4dough, Dec 17, 2003.

  1. Willmow4dough

    Willmow4dough LawnSite Member
    Messages: 56


    I am interested in any thought about late fees to apply to overdue customers. As of the present we do not apply a fee but due to one of our account we are considering it. What if any is a fair charge 10%???:confused:
  2. lawnwizards

    lawnwizards LawnSite Silver Member
    Messages: 2,439

    i apply 10% to the total every 15 days past due.
  3. Guardian

    Guardian LawnSite Senior Member
    from Florida
    Messages: 269

    I simply charge $35 if payment is late. Its in their contract. I have 2 customers who pay late fees without me having to bill them. If they are late, they include the extra $35. Thats rare
  4. Premium Services

    Premium Services LawnSite Member
    Messages: 44

    On most monthly bills 10 days past due date $250 and down 10% . $251 and up 15% its only fair if your late paying bills you get charged so should they.
  5. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Messages: 4,040

    Hi WillMow,

    Here is another post that discusses late fees.
  6. CamLand

    CamLand LawnSite Bronze Member
    Messages: 1,299

    we apply 10%...
  7. gramps

    gramps LawnSite Member
    Messages: 241

    Contract states a $15:00 late fee after 15th. may be charged. One ones who need the push get it. Works good.
  8. proenterprises

    proenterprises LawnSite Silver Member
    Messages: 2,296

    10% is a fair figure, usually 10% for 15 days due and it keeps building up as time goes on at that same rate....
  9. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Messages: 2,116

    I think that the LPF, or Late Payment Fee, should be used as a tool. I think the finance charge should be a revenue source.

    Here's the problem I have today:

    I send a bill to a customer and wait patiently for the check to arrive in the mail. The due date comes and goes. Nothing. Customers don't call me and say "Look, I've got personal financial problems. I'm not capable of living within my means. That's why I always buy things I shouldn't, like lawn service. But I do intend to pay you. I promise to pay by xx/xx/xx, ok?"

    Unfortunately for a creditor, it just doesn't happen that way. Customers don't want to address their problem. They want to hide from it and hope it mysteriously goes away. They continue to confuse wants with needs and eventually they're 'prioritizing' bills, which will never be good for my small business. I have no direct tie-ins to the credit reporting agencies. They know they'll never be answering to a mortgage lender who wants to know why they were late paying the lawn care bill. The fact that I have such a 'nice guy' late fee (2% per month) ensures my bill is always near the bottom of the 'priorities' list.

    This forces the LCO to make a choice. Either suspend service because the bill isn't paid current or continue service. But what if I suspend service on a customer who is late just one time? I risk losing a good customer, don't I? I can spend my time making phone calls and stopping by peoples' homes to collect, but I won't get paid any extra for that work. And I might make them mad if I hound them too much. Not to mention, I hate asking for my money (and I shouldn't have to).

    But the next month they're ever more tardy paying my bill. And even more so the next.

    If only the customers would call and promise to pay on a particular date...

    Here's how I plan to fix my problem:

    I'm just gonna start doing what Texaco does.

    I accidentally missed paying my Texaco bill one month. So Texaco sent me a bill with a whopping $29 late fee AND an 18.99% finance charge.

    Well, I intended to pay and I was outraged that they would assess such a fee. I've been doing business with Texaco for years and I've never been late before. Now I'm late once and they hit me with a $29 fee?

    So I called them. I asked them to waive the late fee and promised immediate payment of the full balance. They agreed to waive the late fee, but not the finance charge. In fact, I never even asked them to waive the finance charge. I was late paying the bill and I understand there should be some reasonable penalty for not paying. I was pleased with the way it was handled. Afterwards, I realized what had just happened.

    Before I called them, Texaco didn't know if I was bankrupt, or if I was dead, or if I just missed that bill or what. They didn't want to shut off my service and cause what could easily be an embarrassing situation for a precious customer. (Customers are precious, aren't they?) So they sent me a ridiculously high late fee. My focus was on the ridiculously high late fee, not the finance charges, which were menial by comparison.

    Texaco got three things out of that $29 late fee: 1.) A promise by me for immediate payment 2.) My focus was successfully re-directed from the hefty 18.99% finance fee to the $29.00 late fee and 3.) If I were 'prioritizing' bills, I'd always make sure the Texaco bill was at the top of the stack.

    I think the LPF should be used as a tool rather than a revenue source. If I don't get that phone call, the one where my customers ask me to waive that $29.00 late fee AND promise to pay, I think it'll make the decision to suspend service a WHOLE lot easier. I'm fully prepared to insist on the finance charge. I'm not a bank. A reasonable customer should understand that.

    Just my two cents.

    DFW Area Landscaper
  10. precisioncut

    precisioncut LawnSite Senior Member
    Messages: 653

    I just charge $15 if not recieved by the 15th. $15/15th Good for me.

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