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S.F. Bay Area, Contractor
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9 Posts
Discussion Starter · #1 ·
We are having a big problem collecting receivables for work completed and invoiced. Can we charge late fees and how much is allowed? Our contract form states that payment is due and payable upon completion of the work. We mainly do exterior work for Homeowners Associations and they (in spite of being informed to the contrary) think that 30 days net is O.K. The problem is that 30 days becomes 60 and then 90. The Property managers cut the checks and then then they go to the Association Board to be signed and the Board delays signing and sending the checks. As a result we now have 0 cash flow. Since these Associations and Property managers are our primary source of work we don't want to offend them. Any suggestions on how to handle this dilemma would be greatly appreciated!:shutup:
 

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Interior Renovations
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253 Posts
I dont know about the money that is owed to you right now, that you might just need to nag them about or if it comes to it take legal action. But in the future you should add it to your contract that a penalty will be added to the final cost after a certain period of time.
 

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Pompass Ass
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2,090 Posts
We are having a big problem collecting receivables for work completed and invoiced. Can we charge late fees and how much is allowed? Our contract form states that payment is due and payable upon completion of the work. We mainly do exterior work for Homeowners Associations and they (in spite of being informed to the contrary) think that 30 days net is O.K. The problem is that 30 days becomes 60 and then 90. The Property managers cut the checks and then then they go to the Association Board to be signed and the Board delays signing and sending the checks. As a result we now have 0 cash flow. Since these Associations and Property managers are our primary source of work we don't want to offend them. Any suggestions on how to handle this dilemma would be greatly appreciated!:shutup:
What does your contract say about late payments?
 

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S.F. Bay Area, Contractor
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9 Posts
Discussion Starter · #4 ·
It says we can charge 1.5 percent interest on late payments, but it's probably 20 years old and I haven't yet updated it. I've been with the company 2 and a half years and am now the administrator and trying to update everything.
 

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Project Manager HFH..
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3,711 Posts
It says we can charge 1.5 percent interest on late payments, but it's probably 20 years old and I haven't yet updated it. I've been with the company 2 and a half years and am now the administrator and trying to update everything.
Well then charge em' 1.5 %......If your contract says "Payment due upon completion" then thats when they should be paying.
 

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S.F. Bay Area, Contractor
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9 Posts
Discussion Starter · #6 ·
Does anyone know what is the maximum late fee we can charge in CA? Thank you for your replies.
 

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Registered
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52 Posts
Under California law, the amount of service charges must be reasonably related to the actual damages. If that's a monthly fee, then you're looking at 18%/year. You'd have to prove in California court that your actual damages (ie. cost of collecting, extra paperwork, hardship) could be higher than that.

You won't find it in the California Business and Professional Codes; I believe this is may be helpful: California Usury Laws
 

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Registered
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184 Posts
I've had exactly the same thing happen to me. To fix the problem I simply talked to the management company and got the billing process expedited. I didn't like the waiting and it made me nervous, although the checks always came.

Another thing I did was getting materials paid before I started the work. They don't really like to pay until the end of the job, not even materials. I think you have to get on a personal level and if you do good work, they won't want to lose you.

I often thought of not catering to them anymore because of all the hassles but they supplied steady work and filled in the gaps during my slow times.
 

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S.F. Bay Area, Contractor
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9 Posts
Discussion Starter · #10 ·
Thank you all very much for taking the time to reply, some suggestions were quite helpful! Melissa
 
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