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Charging late fees

By Bowers ·
I am trying to craft a policy for charging clients late fees when they become deliquent on their payments. What I am looking for is information/links/real life examples about what others are doing out there.

98% of our billings are for IT consulting with 2% being harware sales.

Thanks in advance!

Bryan

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Bryan, the idea here is to encourage

by HAL 9000 Moderator In reply to Charging late fees

Your customers to pay their bills not actually make money off interest.

But having said I think you'll find that once an account has reached the 120 day period it is cheaper to kiss the money goodby rather than fight fot it as you'll end up spending more trying to recover the money than what it was originally worth {not to mention loosing a lot of work time as well [which is also costing you money.]}

A little encourgment in finding a way to make them want to pay goes a long way but it can only go so far as there are people/companies out there that just specalise in ripping other off by not paying their bills and they get someone else in after they have exhausted your "Good Will" Personally I'd go with progress payments for any labour for long term projects and demand a substantial deposit for any hardware related costs that you are going to incure in doing the job. The rest just might get around to paying you eventually but unless it is Government work there is a good chance that once the account has gone past the 120 day mark you havekissed your work & effort good by.

If if is Government work then they can take anything up to 18 months to pay and these jobs you can't charge interest on so you just have to sit there and bear it. I can remember long ago when I still did Governemt work that 23 months after ceasing all Government work we still had cheques comming in for work performed and once you are up and running it doesn't present a problem but you have to get to that stage first which is the hard part and once you stop you have a distorted picture of what your business is actually worth as the income isn't representive of the work being actually performed now or the payments recieved from current work.

The best bet is to put on the bottom of all invoices that an interesr rate of X% will be charged on all accounts over Y number of days and hope for the best. Unless there is a substantial amount involved it just isn't worth all the hassles and lost time in trying to obtain judgments against these outstanding accounts, you just don't supply any more services to these companies/indivules. While you might have a "Legal" right to seek relief from the Court System it just isn't worth the expence or waste of time not to mention that your Legal represintivies also expect to get paid no matter what transpires in the Court so even a Judgment there doesn't necessarly mean that you will get your money and even if you do it is very quickly chewed up in Legal Bills.

So the best advice that I could give is to chalk this up to a "Learning Experience" because you'll know better next time. If any job entails a substantial amount of time involved let it be known that you will require progress payments along the way and if these aren't forthcomming just stop the job and leave after all why work when you aren't getting paid? The same applies to any hardware get payment before you spend any of your money at least that way you won't be out of pocket if you don't get paid for the rest of the job.

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