Late Charges? - Electrician Talk - Professional Electrical Contractors Forum

wirenut1110 · 03-08-2009, 12:58 PM

I was wondering how many, if any, of you charge late fees for overdue invoices.

If so, do you charge a flat fee or a %? Do your customers actually pay it or do you write it off?

I'm asking because I have a good number of commercial customers that are invoiced for service calls and they seem to be consistently late on payments and it's downright pissing me off. Especially when they have a "payables dept." and that's all those people have to do.

I don't want to lose them but, it's getting to be ridiculous, especially now that things are somewhat tight.

I'm thinking I may implement a COD policy in which if it's under,let's say $500, that they pay before we leave even if it's with a credit card. Thoughts?

I've seen a lot of customers, especially restaurants, that when the beer truck or food truck comes, they're given an invoice to be paid then. So, I'm not seeing any difference between the two. I've even told one "owner" that if I came in to eat, could I pay him in 30 days?

Sorry for this long post, it just seems to be getting out of hand.

Thanks for any input.

MDShunk · 03-08-2009, 01:20 PM

1-1/2% per month. Getting AR payments setup as an ACH or EFT payment has decreased the aged receivables by a couple weeks.

480sparky · 03-08-2009, 01:36 PM

I'm with Marc. Pay before I leave is the best option.

If that can't be done, payment is due in two weeks. After that, 1½% per month.

bigmikeb · 03-08-2009, 01:58 PM

Diners,resturants and bars are always the worst payers. The places that have the most cash on hand dont like to part with it. In this area dont pay long enough and a vinnie stops by to collect. I like COD the best.

wirenut1110 · 03-08-2009, 05:23 PM

Yeah, I think I'm just gonna start doing "due on completion, pick up check". I'm not a finance company but I'm starting to feel that way.

Of course we're gonna hear, " the person that does checks isn't here or on vacation this week."

knothole · 03-08-2009, 05:37 PM

We do a 1 1/2 % per month on any unpaid balance.

wirenut1110 · 03-08-2009, 05:49 PM

I realize that's the norm but what I'm getting at is, 1 1/2% on $1,000 is $15. I need the $1000.

I had one customer say "Sir, we are a national company and we don't pay late charges' I about fell in the floor lmao. That was about one of the dumbest thing I've ever heard.

Just Electric · 03-08-2009, 06:12 PM

I do 1.5% after 30 days and then another 1.5% for every week after the first 30 days. I found out if you put that at the bottom of the invoices they pay with-in the thirty days. I had a guy who didnt pay for 2 months on 1450.00 and at the end he paid all the interest. When he called me back for another job he paid me two days later. When its a service call, the payment should be paid at the time of completion.

480sparky · 03-08-2009, 06:49 PM

Quote:

Originally Posted by Just Electric

.... and then another 1.5% for every week. .......

Is that legal?

MDShunk · 03-08-2009, 06:53 PM

Quote:

Originally Posted by 480sparky

Is that legal?

I suspect that he can put whatever he wants on the footer of his bill. Actually being able to legally charge that much might be another matter. Sort of like the sign I saw at a private parking lot. It said, "Private Parking. Violators Will Be Towed and Crushed". That gets the message across, but I seriously doubt that anyone's going to get their car crushed.

wirenut1110 · 03-08-2009, 06:59 PM

I may be wrong but I think the max legally is 24% annually of course 2%/month. However, a late charge fee can be as high as $30 or $35. That's why I do a $29 late charge vs the 1 1/2-2%. Neither of which I collect on so just pay me what you owe...lol

480sparky · 03-08-2009, 07:05 PM

Quote:

Originally Posted by MDShunk

........ Actually being able to legally charge that much might be another matter. ......

That's my point. Suppose you start charging some poor slob 1½% per week, and his sister just happens to work in a law firm.....

I'm all for firm language about paying up, but I don't think I could get away with "Failure to pay by the date listed will cause Vinnie and Bruno to come over to your house, ........"

wirenut1110 · 03-08-2009, 08:56 PM

Maybe Obama will fix everything.

Just Electric · 03-08-2009, 09:51 PM

It does scare the customer to pay their bills on time. If they dont have the money to add somthing to there home, then they shouldnt be hiring anyone. I am not a finace company. Specialy in this point in the economy.

480sparky · 03-08-2009, 09:55 PM

I tell people I have an agreement with the bank. I don't loan money, and they don't do electrical work.

kbsparky · 03-08-2009, 10:54 PM

"Past due invoices subject to service charges of 2% per month[24% per annum]+ attorney fees and collection costs"

Put that wording on each and every invoice and contract, and you will have better luck enforcing it.

And start hitting `em with those fees.

Usually when a commercial customer has not paid, and then calls for additional problems, reminding them that the previous invoice has not been paid gets their attention much quicker.

slowforthecones · 03-09-2009, 06:05 AM

I don't charge late fees but I'll fax every E.C. in a 100 mile radius that you don't pay. i've done it before many times and the ec's in the area will often show that fax to a customer who has a unpaid bill with me.. often I get payment quick with a note "stop telling people we don't pay or we don't pay on time"

sue me but i don't see it as libel if someone has not paid within 90 days and certified mutiple mailings of invoices. i have to be a bit thuggish to get paid, this is california and people aren't good for on credit ever. Non paying or late paying customers are not customers I'd want as repeat.

wirenut1110 · 03-09-2009, 07:38 AM

Thanks for the insight guys. I think it's just going to go COD and not take any excuses as to why they can't.

When they call I'll let them know that someone will need to be there to pay before we leave. That's how we do it for residential service.

bobelectric · 03-09-2009, 07:46 PM

Quote:

Originally Posted by bigmikeb

Diners,resturants and bars are always the worst payers. The places that have the most cash on hand dont like to part with it. In this area dont pay long enough and a vinnie stops by to collect. I like COD the best.

I disagree.

GregS · 03-09-2009, 08:36 PM

Quote:

Originally Posted by wirenut1110

I had one customer say "Sir, we are a national company and we don't pay late charges' I about fell in the floor lmao. That was about one of the dumbest thing I've ever heard.

Heh, I had the same thing happen to me.. I sold Disney a bunch of stuff, shipped it all off to Disney World and everything along with a 'Full payment within 30 days'.

36 days pass and I call them up.. They have an AP team for each letter of the alphabet based on your company name. I got ahold of mine, asked them for the money, to which they replied "But we're a Fortune 500 Company! We cannot pay right away!" To which I replied, "I'm NOT a Foture 500 Company, the deal was 30 days, and you are past due and are now due interest."

They eventually paid, with interest.