Late Fees

 
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Old 06-13-2018, 10:18 AM   #1
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Late Fees


I run a small two man repair business the majority of our work I would say 90% is rental maintenance. the majority of our work comes from one management company that manages 208 pieces of property. We do everything from Plumbing flooring lock changes window repair and such. the management company calls me and we do the job when the job is complete I invoice the management company they forward the invoice to the landlord slash property owner who and turn pays me. being a small to men operation we operate on a shoestring we have only been in business 6 months, sometimes it takes a month plus to receive a check from the property owner / landlord. My question is what is the easiest way to assess a late fee, I was considering adding it to the next job and noting it with the past due invoice number. A lot of the work you do is on a repeated basis to a lot of the addresses. Any advice would be greatly appreciated. Thank you, and may God bless America again please
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Old 06-13-2018, 11:40 AM   #2
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Re: Late Fees


You can try adding a notice on your invoices.

Factor it in to your pricing.

But if you become to big of a PITA they will just go some where else.

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Old 06-13-2018, 11:42 AM   #3
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Re: Late Fees


Hit me suggestion as to the wording?
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Old 06-13-2018, 12:15 PM   #4
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Re: Late Fees


Waiting a month for this type of work seems reasonable

I wouldn't add stuff to invoices that are not part of the work performed on that invoice

Do you send monthly statements? that would be the place to add you past due fees
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Old 06-13-2018, 01:48 PM   #5
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Re: Late Fees


Do you offer net 30 terms?

Perhaps tell them you will be moving to net 10.

Don't get to pushy with the late fees. It's part of doing business I am constantly spending business money on the next job before I get paid for it.

What you can do is offer a 2% rebate if invoice is paid within 4 days. I know some companies that love this and will have money in your account within 24 hours to get the discount.

Also look into direct deposit it can speed it up not having to wait for a cheque to get processed

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Old 06-13-2018, 02:13 PM   #6
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Re: Late Fees


Instead of a late fee, offer a discount for paying quickly.
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Old 06-13-2018, 03:34 PM   #7
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Re: Late Fees


My invoice states net due in 14 days .I pay all my damn bills within 7 days, I don't see the problem
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Old 06-13-2018, 06:42 PM   #8
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Re: Late Fees


How are you sending the invoice to them?

If it's through snail mail you have to assume a couple days for it to get there if they are sending a cheque back through snail mail you have to assume a couple more days.

If they have net 14 you can't expect them to pay in 7 don't forget net 14 is business days excluding SAT and sun so it becomes almost 3 weeks.

Offer a 2 percent discount for payment within 72 hours.

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Old 06-13-2018, 06:49 PM   #9
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Re: Late Fees


Quote:
Originally Posted by Danoh View Post
I run a small two man repair business the majority of our work I would say 90% is rental maintenance. the majority of our work comes from one management company that manages 208 pieces of property. We do everything from Plumbing flooring lock changes window repair and such. the management company calls me and we do the job when the job is complete I invoice the management company they forward the invoice to the landlord slash property owner who and turn pays me. being a small to men operation we operate on a shoestring we have only been in business 6 months, sometimes it takes a month plus to receive a check from the property owner / landlord. My question is what is the easiest way to assess a late fee, I was considering adding it to the next job and noting it with the past due invoice number. A lot of the work you do is on a repeated basis to a lot of the addresses. Any advice would be greatly appreciated. Thank you, and may God bless America again please
You get paid net 30 for that kind of work? I'd be elated with that, most of my big clients are net 60 or net 90 take it or leave it.

What you need is working capital.
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Old 06-13-2018, 07:55 PM   #10
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Re: Late Fees


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My invoice states net due in 14 days .I pay all my damn bills within 7 days, I don't see the problem
30 days for commercial accounts is standard. Do you have accounts with supply houses? They're 30 days net as a rule. I see you being short lived in the property management business with this attitude.
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Old 06-13-2018, 07:58 PM   #11
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Re: Late Fees


your too cheep raise your rates
then when you send an invoice add 10% to the total for a holding fee
sit back wait 30 days for your check
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Old 06-14-2018, 08:46 PM   #12
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Re: Late Fees


In your case, where 90% of your work comes from one company you will shoot yourself in the foot by adding a late fee. You are dealing with mature business men and they may not take well to a late charge since they may feel that since you are a small company they are already doing you a favor by giving you a lot of work.

The best move is to have a VERY FRIENDLY face-to-face conversation about a job and then tell them that you are tight for money during the month and ask if they can speed up the payment process

Late charges are insignificant compared to the amount of money you can earn and a late charge will not get your money faster and only anger people. You have to realize that management companies have thousands of things going on every month and they have to dance through hoops for the property owners to get you paid. Property owners are generally tight wads and your management company will not like having to answer to their clients (the property owners). Waiting for management companies to pay in 30 to 90 days comes with the territory. Especially, when that is the type of business you rely on.

Perhaps, your problem is not having to wait for money and it is that you are not charging enough to keep your bank account full all the time.

I did millions of dollars worth of work for one management company and sometimes they were behind on payments for up to 1 year and owed me $40,000, but not one time did I ever get upset because we earned each other's trust to the point where I was charging more than $10,000 per week, never had to get pre-approval for a job and was never questioned in a bad way about a bill.

The management company I worked for managed both apartment buildings and shopping centers. The shopping centers are where the huge money is because the management company will lose accounts like Target if the stores have a property problem where the store cannot operate for even one minute.

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Old 06-14-2018, 09:37 PM   #13
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Re: Late Fees


I agree somewhat with this but at the same time I'm not a bank I'm fine with net 30 but don't abuse it.

I had one customer get to comfortable and I had to hit them with late fees to get them back on track because it got to the point they thought they could just pay when they felt like it.

I mean MasterCard won't let me just get around to paying when I want doesn't matter if I've made all my payments for years.

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Old 06-14-2018, 09:38 PM   #14
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Re: Late Fees


Quote:
Originally Posted by Stryker1-1 View Post
I agree somewhat with this but at the same time I'm not a bank I'm fine with net 30 but don't abuse it.

I had one customer get to comfortable and I had to hit them with late fees to get them back on track because it got to the point they thought they could just pay when they felt like it.

I mean MasterCard won't let me just get around to paying when I want doesn't matter if I've made all my payments for years.

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For me accepting credit cards really helped with lazy cheque writers...and email reminders.
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Old 06-14-2018, 09:43 PM   #15
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Re: Late Fees


If I do a job and I know I'm going to get paid right away, I will charge, say, $2000 for it.

If I know it may take 30-90 days to get paid, the job is more likely going to be $2200 or even $2400.

What's so difficult to understand about that?
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Old 06-15-2018, 04:58 AM   #16
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Re: Late Fees


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If I do a job and I know I'm going to get paid right away, I will charge, say, $2000 for it.

If I know it may take 30-90 days to get paid, the job is more likely going to be $2200 or even $2400.

What's so difficult to understand about that?
That, plus they don't get priority treatment. If ya can't be bothered to pay us timely, why should we go over & beyond to complete your project ahead of others?
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Old 06-15-2018, 05:09 AM   #17
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Re: Late Fees


Sure sounds like you gotta start throwing a hundred bucks from every check you get into a savings account until you have a couple grand in working capital.

We don't have any customers that don't pay within two weeks, but our written estimates have very clear language stating that payment is due upon completion of the project. We weed the slow payers out ahead of time.

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Old 06-15-2018, 11:45 AM   #18
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Re: Late Fees


Quote:
Originally Posted by Inner10 View Post
For me accepting credit cards really helped with lazy cheque writers...and email reminders.
Same here and getting customers on direct deposit no more oh the cheque is in the mail routine

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Old 06-15-2018, 01:58 PM   #19
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Re: Late Fees


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That, plus they don't get priority treatment. If ya can't be bothered to pay us timely, why should we go over & beyond to complete your project ahead of others?
Or do what I did with one habitually late payer:

Started a $24K job that was going to be split into three sections, so $8k was due at the end of each phase. They barely made the first payment before the second phase started.

By the time the third phase started, they hadn't paid for the second. They were now 8 months behind. Of course, they were calling me and calling me and calling me to 'get on it'.

I finally talked to the owner and he said I had to get to the site. I said, "Tell you what, I'll stop by the office, pick up my check for $16k, and sometime in the next 8 months I'll get to it."

If it's OK for me to wait 8 months for my 8K, it's OK for you to wait 8 months for the pre-paid work to be done.
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Old Yesterday, 08:38 PM   #20
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Re: Late Fees


Griz hit this on the head with the PITA factor. These larger companies think they can crush little guys with volume.

"You can have all the lowest paying work you can handle!"

You may find raising your rates extensively or looking for a late fee will cost you 90% of your work load. It always feels nice to turn your nose up at a bad deal when you're in the right but keep in mind, you can't eat a pride sandwich.

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