Late Pay Interest

rservices

I expect to get paid generaly 30 to 35 days onmost of my work (chain restaurants) thats fine I know that going in.
But today I did some work for a new national chain, and the manger tells me that they pay 45 to 90 days..BIG SHOCK

What do you folks charge for interest or late fees.

POOLMANinCT

tell them save .5% if they pay in 7 days,,


works for me w/ 2 international hotels companies,, or else they try to stick it out 45... they will move for .5%

Mud Master

I charge 2% interest on all invoices over 30 days

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Grumpy

If this is something they stated upfront you adjust your price to account for the interest you would incur on a short term loan.

If they are just popping this on you now out of the blue after the job is done, you kindly point to the line in your proporsal that they signed which says payment due 10 days net, or in your case 30 days net. Explain you need to be paid on thisone, but the next one you will be happy to wait.

Here is why you should NOT wait 90 days... if you are thinking "Oh in 90 days I will get paid so I'll just sit tight" and now let's say 100 days pass and you are still not paid. So sorry so sad, you just lost your lien rights (in the State of IL).

Ok onto your question: "1.5% compounded monthly or the maximum allowed by law." That's what it says on my contracts and my invoices.

Chris G

You have to live by their terms. Sucks, but that's the way they operate. Remember, if it's a big national chain, they've proabably paid out hundreds of millions of dollars to suppliers before you, all with those terms. You are a tiny tiny speck on their radar. If you cause problems you will be elimintated.

But it never hurts to ask! If you have a good relationship with your client contact, you could ask for an exception. But for gods sake, don't threaten them with a interest for accounts unpaid over 30 days. You're not a corporation billing in the tens of billions You won't lose significant money if they pay late.

And I don't think you will have much luck putting a lien on a large corporation.

If your doing maintenance and repair for these guys, the relationship with your client is built on service. Make life easy for the individual who is your client, and you will be rewarded.

Ed the Roofer

Grumpy, please note a correction regarding lien rights, especially in Illinos. 90 days for intent to lien. 120 days for lien to be filed to be considered a "Perfected" lien. 2 years to file the lien, but it does not provide the "Perfected" lien rights otherwise granted which puts your company in a higher position on the eventual payout process.

A "Perfected" lien also must be written out properly and notorized. Yes, absent this simple $ 1.00 notarization, the lien validity can be challenged and overturned.

Back to the interest rate in question. Many of us use 1.5 % or 2 % on our billing, but that is not actually legally binding. There is a maximum ceiling called a usory rate, which is 9 % per year. That works out to .75 % per month not compounded interest. Most people/contractors are unaware of this, so the 1.5 % and 2 % get by without question most times.

The national chain probably will not pay any such late fees. I know that none of the former GC's I ever worked for in the past did, even though I attempted to pursue it, up to the point of not losing future business with them.

Ed

Grumpy

Thanks for the schoolin' Ed.

Chris, correct me if I am wrong and forgive me because this is going to sound bad. Do you have a habit of laying down and taking it? Your advice in the last reply was highly pesemistic. What I took away from it was "This is how it is and there is nothing I can do about it."

mdshunk

I found at least one national company that says they pay in 90 days, but they never pay. They get you to do a boatload of work for 90 days, until you realize that you're havn't been paid for what you did months ago. I guess in another 6 months, they find another sucker and do it all over again.

Grumpy

Mind sharing the name of this company? I hate companies that make profit by screwing others purposely.

mdshunk

PM sent.

JMGP

You are wrong about not having any luck with a lien on a corporation... they are no different than the small guys when it comes to following the "Contract" or the "Terms & Conditions" of a contract... if they fail to follow you CAN put a lien on the property and have success... the restaurant will not open until lien is paid... corporations may have a bigger bank account and work with larger numbers BUT the same rules apply...

You just need to make sure your contract is fair and clear... if you get the signiture... your all set..

I have a family members that owns a road construction outfit that does most of the construction for the Big Box Home Stores in my state and just recently one of the stores being built fell behind in timely "Contracted" payments... so they put a lien on the property and this store paid immediatly...

I agree with simplifying things as much as possible and making things easy for both party's... but if a customer fails to pay on time...and it clearly states in the contract what happens when paying late...business is business....

you dont want customers that cost you money anyways... them paying late DOES cost us money... Example: time spent chasing the money, sending bills, phone calls, possible attorney's fees, interest accumulating on credit accounts.. etc etc... dont seem like much but...I think the majority of us here are small outfits that rely on timely payments...

just my thoughts....

Ed the Roofer

Grumpy,

Add a sworn statement to the lien process as well to identify all material purchases and subcontractors as well. It is a fine tooth comb splitting hairs type requirement.

I discovered from experience, that a GC can bond over your lien. I was lucky though, because the bank that held the note on the loan for the KFC restaurant I liened had a sympathetic woman working there. Her husband was in the trades, she told me. She said she would just forget that there was a bond over my lien and had the bank cut me a check directly. Nice lady. She said she just hated to see the small guys getting screwed by the big walleted GC's.

Ed

vwovw

pmme as well please
30 days sucks.... but 90 days bummer

Chris G

I've never had any luck speeding up payments. I figure they have a policy in there accounting department, so that's the way it is. Really. I'm am so NOT a "This is how it is and there is nothing I can do about it person". I'm open to hearing about the process. My large corporate client pays in 30 days, (give or take a few). If I don't get a cheque in 30, I put in a courtesy call, and it's usually dealt with right away.

I come from the ad industry, where 90 days is standard. And if you make a fuss, you won't get any future work. Maybe my attitude is spilling over from that.

Danahy

I get charged 2% from my suppliers, so 2% to my customers makes sense. If I needed to, I might word it like a 2% early payment discount but I'll brain that out later when/if it comes up.. (most of my work is 10 days or less, paid when complete)

The important thing I've realized is that I have to charge appropriately all the time to cover things like that. I like to imagine a regular guy, getting his regular pay saying "no, it's ok boss... just give me that cheque next season.", and thinking about how this would affect my life...

Jerrald Hayes

Rservices, we've been there and have done that.


Typically in residential work for homeowners our policy is to be paid when invoiced but we have some leeway in how hard we are on that. Our contract clients know we invoice every other Friday for work that was done up until that previous Friday and we use a system for billing that I modeled after the method described by Brian Sutton in his excellent JLC article entitled: Getting the Final Payment. With our clients knowing they are going to be invoiced on a Friday they are often ready to pay us then but if we don't get our check until Monday or Tuesday that's okay too. After those three business days we'll ask them about the invoice we gave them on Friday.

Established General Contractors we sometimes subcontract to we either work billing twice a month or once a month depending upon there typical payment structure. If you want the work with them you sometimes have to work with their payment schedules and plans.

Same thing applies to commercial clients too. If you want to work for them you have to work according to the payment schedules they run their businesses by. We used to do work doing casework installations for that big coffee company whose stores you've see popping up everywhere for years now and I think their terms were 90 days.

We agreed to that but in developing our estimates and planning our projects with them since we could think of what we we're doing as helping to "finance" their project for those 90 day we worked into the price we gave them what we though was reasonable compensation (90 days worth of interest) for us waiting that time.

We also have had on a couple of other occasions where we we doing some big huge job for some restaurants and night clubs (single stores, not big chains) where we offered a 2% discount on any invoice they paid in something like 3 to 5 days and I can remember with one big client we once had who was developing this multi-million dollar restaurant and night club that he was so anxious to save money where ever he could that he always took advantage of that discount and we used to get our check from him in 5 minutes not days.

Of course you just don't give that client that 2% discount off of your baseline estimate. You have to do as I mentioned above and work that 90 day wait into what you want to get paid and then offer the prompt pay discount because you don't know whether or not they will take the discount or not.

As for what the legal interest you can charge on late payments under what ever terms you have agreed to you are best off checking with you lawyer and/or accountant to find out what the legal interest rate is in your state since that can vary. And you really need to state the terms of what is late and how much it costs in your contract agreement too.

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Jerrald Hayes About ParadigmProjects.com

Chris G

Ooops. I thought the original poster was doing repair/handyman services for his client. I didn't notice the words "flooring" under his sig.

In your case, you're carrying a significant load of material costs. 90 days is definately not acceptable. 45 isn't really acceptable.

Sorry 'bout the confusion. Somehow I got it in my head that you were installing towel racks in a couple of bathrooms, (or that sort of thing, must have confused your name with another poster). Hence my thoughts on not putting a lien on the property over $250.

Billing for handyman serivces is a little different. There are some neat tricks to it btw. Anyone know about the $500 limit?

concretemasonry

The contract or purchase order agreed on should have terms for payment. Unless two different prices are possible (cash and credit), it should also include any provisions for payment. Some large corporations will look at alternate prices for good contractors if that makes the paperwork fit the flow better. Private companies are not obligated to take the low bid that public organizations are required to do. That is the reason for knowing and understanding your cutomer.

A contractor's policies do not always agree with an owners policies. That is the reason for including the terms.

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Dick

Engineer, designer and consultant recently active domestically and internationally on construction and design in about 35 countries.

thom

I did many major remodel projects for Dennys Restaurants and 76 truck stops years back. They were always 90 days. I knew it going in. They paid slow, but very well.

I did a few projects for Pizza Hut. They said they paid in 30 days but didn't pay at all. At least until I went into their corporate offices screaming and swearing (I'm a big guy). They wrote me a check on the spot then.

Susan Betz

At this point in our growth curve, all commercial contracts are 30 days net. If they can't do those terms, we can't take the job, because *we* can't do more. We politely tell them we are not the bank.

There are large companies that do 90 days that are solid about paying. But if you can't afford to wait, you can't afford to take the job. And I agree with those who build an interest charge into those 90 day terms. Money isn't free - a commercial interest can afford to pay for it, whether it's you or the bank.

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Fences of Distinction, Ocala, FL
http://www.fencesofdistinction.com