Customer Late Fees?

[AprilP]

Does anyone change late fees for balances due over 30 days? If so, how much? Thank you.

 

[Common janitor]

Yes. You're limited by state law most of the time as to what will hold up in court . My contract states 5 percent per month .
I know that sounds steep but it's been upheld in Pa. courts many times .
All the Best, Ed

 

[PistolPete]

I was also told by a contractor recently that if you build an additional 1-3% into your bill you offer early payment discount.
Terms read as 3% discount net 10 / Net 30
Some companies require their AP to always take advantage of invoice discounts so you can get paid quicker.

 

[Todd the Cleaner]

Luckily I’ve never had to deal with that. I’ve only had a couple invoices over the years that took more than 30 days to pay, I’ve never had one go over 45.

At 30 days I’d send them a reminder email or invoice just in case it slipped their mind and they forgot. At 45 days I guess I’d send a late notice telling them that late fees will start accumulating at 60 days.

 

[keep it clean]

I was also told by a contractor recently that if you build an additional 1-3% into your bill you offer early payment discount.
Terms read as 3% discount net 10 / Net 30
Some companies require their AP to always take advantage of invoice discounts so you can get paid quicker.

I like that idea. So that could over ride the 30 day wait on commercial jobs?

 

[PistolPete]

I was also told by a contractor recently that if you build an additional 1-3% into your bill you offer early payment discount.
Terms read as 3% discount net 10 / Net 30
Some companies require their AP to always take advantage of invoice discounts so you can get paid quicker.

I like that idea. So that could over ride the 30 day wait on commercial jobs?

Yup. Like I said, he told me some companies are required to pay early to get the discount. Key is to build it into the price up front otherwise you're giving up profit.
That may still be beneficial if you need the cash flow.
My friend is a steel fabrication contractor.

 

[wandwizard]

Luckily I’ve never had to deal with that. I’ve only had a couple invoices over the years that took more than 30 days to pay, I’ve never had one go over 45.

At 30 days I’d send them a reminder email or invoice just in case it slipped their mind and they forgot. At 45 days I guess I’d send a late notice telling them that late fees will start accumulating at 60 days.

Actually the balance should become due upon receipt. If they go over 30 days the late fees start then. I generally am more lenient with landlords and businesses. Some businesses won't pay within 30 days no matter what, but they need to let you know before you do the job. When I did Applebees I could usually count on at least 45 days or close to it, but I always got paid. I have one customer I've had for many, many years that I can pretty much count on being late, but he's never once failed to pay. I know when I bill him it will likely be over 30 days so I don't sweat it or charge a late fee. Over 60 I did charge a late fee even on him. He never did it again.

 

[AprilP]

Yes. You're limited by state law most of the time as to what will hold up in court . My contract states 5 percent per month .
I know that sounds steep but it's been upheld in Pa. courts many times .
All the Best, Ed

Thank you Ed for your input, I will look to see what is allowed in my state, but 5 percent sounds good! April.

 

[AprilP]

Actually the balance should become due upon receipt. If they go over 30 days the late fees start then. I generally am more lenient with landlords and businesses. Some businesses won't pay within 30 days no matter what, but they need to let you know before you do the job. When I did Applebees I could usually count on at least 45 days or close to it, but I always got paid. I have one customer I've had for many, many years that I can pretty much count on being late, but he's never once failed to pay. I know when I bill him it will likely be over 30 days so I don't sweat it or charge a late fee. Over 60 I did charge a late fee even on him. He never did it again.

It is actually the same handful of customers....I usually have to send out several reminders and invoices, they always end of paying but what a hassle for such a small amount. Maybe I just need to practice patience.

 

[AprilP]

I was also told by a contractor recently that if you build an additional 1-3% into your bill you offer early payment discount.
Terms read as 3% discount net 10 / Net 30
Some companies require their AP to always take advantage of invoice discounts so you can get paid quicker.

This is something I am going to really consider, thank you for your input.