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Posted:  21 Jun 2011 03:21  
My contract is fairly simple...but I'd like to add something about late fees.. I've gotten mixed advise on this subject.  If I'm late on my Visa it will cost me $39.00 at my bank...So can I charge a client a late fee when they are past due?  And if so should I state this in the contract? My small clients pay on time, but the bigger ones love to run 45 to 60 days late.........
Posted:  21 Jun 2011 14:57  
Just don't call it interest or you'll run afoul of federal credit laws.  Call it a "service charge".

Posted:  21 Jun 2011 15:32  
Things get tough when everybody else is using the collect-fast, pay-slow mentality. The bigger businesses are always the worst, it seems... I dunno if it's because it's not someone's own business/baby or if there is just too much red tape.

You can certainly decide to impose a late fee on past-due accounts, but you MUST have the terms stated on your original contract & original billing materials. US Small Business Administration states the following.

Consider a Late Payment Fee

If you choose to implement this "incentive" to payment, be sure to state it clearly in your contract or payment policy before doing any work (the law actually requires this in order to avoid violation of the Truth-in-Lending Act). Typically, late fees are a percentage of the total bill (usually 2 percent). If you feel the need to fall back on this when late payment occurs, let your client know that you are moving forward with this practice.

Also be aware that interest charged on late payments may be subject to state usury laws limiting the amount of interest that can be charged. If the maximum amount of interest is exceeded, the debt may be forfeited and a penalty assessed.

These two articles can be pretty handy.

Getting your customers to pay-up: Part 1

Getting your clients to pay-up: Part 2
Posted:  22 Jun 2011 00:09  
I believe you can charge a flat dollar fee (say, $25.00) for each past-due invoice without getting into interest charges and other lending devices that fall under federal regulation.  I've seen them called "service charges" or "re-billing fees"...they are NOT a percentage charge, but rather a flat fee, similar to what banks do for over-limit, bounced-check and other account fees that are not interest-related.  This topic was discussed on the earlier incarnation of this forum as well as elsewhere, I recall.

Run it past your attorney to be sure, though.

Posted:  22 Jun 2011 20:41  
Here's another take on this:

Offer a small discount (2% to 5%) if they pay within 10 days.  Many companies, especially larger ones, have a policy that requires them to pay on this type of schedule if a discount is offered.  I've done this for my own business and it makes a big difference in cash flow.

Another option is to offer payment by credit card or setting up automatic payments.  Up to you if you want to offer any kind of discount with these options, probably not if fees are involved such as credit card fees.  You get the money in your bank account in a couple of days this way.

And I assume that you are billing at the beginning of the month for that month's work???
Posted:  22 Jun 2011 23:52  
Big assumption, Kathy...not for this poster in particular, perhaps, but for many 'scapers...you'd be surprised how many DON'T bill in advance.


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