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JMM0254
01-16-2008, 06:47 PM
I'm, looking for any info/suggestions on what to set up for a late fee for slow paying customers. I am not sure if there should be a fee based on a percentage or a flat fee, also should late fees take place after so many days (as in the case of customers that to pay "upon receipt" of invoice) and those that are on a 30 day due date. What percentage and/or what flat rate fee? Are there specific requirements or maximums allowed by state? How far can one go back and access late fees?

Any help would be appreciated. Thanks.

FourSeasons
01-19-2008, 12:36 PM
I just charge a flat rate of $5 if their payment is not in by the due date.
I don't know about any laws for late fees though.

realhuntin
01-19-2008, 02:38 PM
OK first and foremost you shouldnt be doing Net 30 on any account for Resi ONLY Commercial and that is ify at best. Just my opinion.

Second You cant go back if its not on the invoice and charge back lete fees, You can send a statement of the invoices that are over due and add late fees to the total due at the current time of the statement.

If your not charging late fee % and posting it on the invoices people will have tendences to forget to pay or put you on the back burner.

Here is what is on ALL my Invoice and you may have to check with your State about this but it is common practice to allow late fees as part of your Terms and Conditions.

Thank you for your business.
Please make checks payable to R & R Lawn Care. Accounts 15 days past due, a finance charge of 1% per 15 days will be added. This is an annual percentage rate of 24%. All legal, attorney fees, collection fees will be charged to accounts turned over for collection.

FourSeasons
01-19-2008, 03:05 PM
oh yeah i was talking about my residential customers only.
I guess there are alot more to late fees than I realized.

Steve
01-19-2008, 06:48 PM
Quote[/b] ]OK first and foremost you shouldnt be doing Net 30 on any account for Resi ONLY Commercial and that is ify at best. Just my opinion.

Tim,

Do you have any thoughts on how you can feel out a commercial client to see how long of a time they should have to pay the invoice. If they want more than 30 days to pay, is this a deal breaker?

realhuntin
01-19-2008, 07:51 PM
Quote[/b] (Team Gopher @ Jan. 19 2008,6:48)]Quote[/b] ]OK first and foremost you shouldnt be doing Net 30 on any account for Resi ONLY Commercial and that is ify at best. Just my opinion.

Tim,

Do you have any thoughts on how you can feel out a commercial client to see how long of a time they should have to pay the invoice. If they want more than 30 days to pay, is this a deal breaker?
Your terms and your conditions, if your bid is accepted and there is a issue with the terms and conditions and the client expects more time (45-60 days) to pay invoices you probably are going to have trouble getting paid on time anyway so if it bust the deal then you're better off without the headaches and let some other poor slob deal with them. Try and check up on the clients payment history if you can, this will help determining if you want to do businesss with this customer before you submit a bid.

I don't let ANY customers go over 30 days past due Resi or Commercial. On the 31st day I begin collection actions. No exception. Im in business to provide a service on time and for a fair and reasonable price, when services are preformed I expect payment on time per agreed trems and conditions. So there is no confussion I do work out payment arrangements for customer that contact me, I only continue services if payment for that days service is paid in full upon completion, and they stand to the payment arrangement. If they faulter in anyway I stop service and begin collection actions, I inculed all past due amount, late fees, early cancellation fees, collection fees etc. to a final bill, send it general mail and a copy certified signature required they have 7 days to respond, after the 7th day it is turned over to the attorney for legal actions. We dont live in a perfect world so be prepared to take action on accounts that continue to be late and unpaid. Most of the time with in the bid package you will have a customer requesting to be net 45 or 60 and this is very rare, what I have found is these are only for the 1st 30 day billing after the 1 payment is received every 30 days from then on will be payment, until paid in full, now here is where the trouble starts the season is over and your still expecting payment for work completed 2 months ago and the customer becomes lazy with the payments and gets futher behind. I stay away from this type.


I have 5 Commercial accounts in the full maintenance services grossing over 60k per year alone, Not one time, was or has there be a issue about the terms and conditions. 2%- 10 days, Net 30.
I issue invoices on or about the 24th of each month, between the 5th and 10th of the following month I have my money.

THIS DOES not include NEW CONSTRUCTION landscape, hardscape projects, these typically have an application for payment on completed work submitted around the 25th of each month the project is underway, and payment is uselly made by the 10th or 15th of the following month. You can not charge late fees for this. this is a typical AIA Form that is submitted. Sometimes it take up to 60 days to receive payment, so if your doing a project like this be perpared to survive 60 days, if payment come before that is a plus.

Hope this makes sence, sometimes my brain works faster than my fingers type.

Steve
01-19-2008, 09:56 PM
This is a great topic because I think many new lawn care business owners get into a situation with a commercial client where they don't want to pay until 60, 90 days or possibly even more!

I do think this is an eye opening experience.

Ultimately, I guess it comes down to, don't let that commercial account walk all over you, just because you think this is going to be big money!