💰Payments Do You Charge Clients More For Late Payments?

[shattered world]

I've got some clients who pay late, sometimes even up to a month late.

This got me thinking that if I were any other mainstream business, I'd be sending out late fees with the next invoice.

I'm thinking I might do this, but I don't want to turn the clients off too much.

Now I'm wondering if anyone here has done that successfully. Tell me how it went cause I'm seriously thinking about doing it to discourage late payments.

 

[SilverClouds]

Month late, wow... I just stop the service if it's unpaid, but I wonder. Also afraid they'll just run away if price suddenly increases lol. Try it and tell us how it goes. I do have a cancellation fee, this usually doesn't happen, but had a client transfer money and then she changed her mind before I started so I sent money back minus cancellation fee. Dumb bitch went to the police (no, I didn't return cancellation fee lol, but it was stressful). Other than that generally I don't do refunds and I hold the money, clients can use it for different services etc (like balance in smm panel idk). I take upfront payments, if client doesn't pay next month, week, etc I just stop working. Newest client sent money and I'm waiting for *him* to be ready since his website is unfinished. Money already mine and I'm using it. Honestly since I get paid upfront I even had situations when small businesses went bankrupt for various reasons (it happens, most businesses fail eh) and I still had their money in my business bank account and they never requested a refund or more services.

 

[Champagne]

It honestly depends on the situation. If it's a long-time client and they're just going through a difficult period, you can cut them some slack and give them a few weeks to pay up. If it's something that happens regularly, I'd let them know in a friendly way that I have bills to pay too and that I expect them to pay on time.


It really depends on the client and the reason they're not paying, but I'd give them at least a few days before charging any extra fees.

 

[t2van]

I've got some clients who pay late, sometimes even up to a month late.

This got me thinking that if I were any other mainstream business, I'd be sending out late fees with the next invoice.

I'm thinking I might do this, but I don't want to turn the clients off too much.

Now I'm wondering if anyone here has done that successfully. Tell me how it went cause I'm seriously thinking about doing it to discourage late payments.

Nah we don't do late fees. To be honest if someone not paid a 3-15k+ invoice chucking 8% on it won't do anything to make them pay.

We got a client who buys off us and we buy off them we both push a 90 day window to the point it takes the piss to be honest.

If someone is late normally 30 days late that we don't know who they are. We send out a 14 day letter to pay the funds or we send it straight to our solicitor to start court proceedings.

The threat of court action 95% of the time for us gets payment or we can resolve the situation before then.

 

[shattered world]

Nah we don't do late fees. To be honest if someone not paid a 3-15k+ invoice chucking 8% on it won't do anything to make them pay.

We got a client who buys off us and we buy off them we both push a 90 day window to the point it takes the piss to be honest.

If someone is late normally 30 days late that we don't know who they are. We send out a 14 day letter to pay the funds or we send it straight to our solicitor to start court proceedings.

The threat of court action 95% of the time for us gets payment or we can resolve the situation before then.

Just curious and the answer is probably obvious but do people you ever threaten with court action ever try working with you again?

 

[t2van]

Just curious and the answer is probably obvious but do people you ever threaten with court action ever try working with you again?

Yeah all the time.

Same as the companies, I push 90+ days when it comes to payment, they threaten me, I pay, and we all still get along. It comes down to the reputation you have with them and the trading history.

End of the day, it's business.

Every business is different; you don't know what goes on and the economy can play a part of the problem or if a company comes to us and they secured funding via some grant or something, that can hold things up.


That said. If I did 90 day+ when I just opened an account with a new supplier, and it's standard 28 days id expect my credit account to probably get withdrawn for taking the piss, but I should be able to order on an invoice basis.

Biggest issue is communications.

Bigger companies tend to have levels of bullshit management to get through to find out what's going on. If you're dealing with a 1-2 man band they tend to stick their head in the ground - it's easier to just talk and explain no matter what side of the fence you're on, being chased or doing the chasing! When it goes to court (UK), you need to show you done all you can to reach out to them and send them notices etc!



HOWEVER

I more than understand if you are working for your self and almost working client to client to feed and pay your bills that can be tough. I'm a big fan in that instance of splitting payments via milestones, something like 30-40-30. This way your final invoice, although it can cause issues, your overheads should be covered in the first 70% and the outstanding should be your savings, tax and profit that's outstanding.

Helps takes some pressure off you BUT I get not everyone can work like that. But we should.

When it comes to digital services, I think it's always funny because it's still the old "its a computer stigma" so people think, why should they pay for something in advance.

However, no other trade or service will work on something for me without me paying a deposit or something up front. I guess you can say mechanics are the exception, but then they have your vehicle as collateral.

 

[SilverClouds]

I do the milestone / weekly / etc upfront split payments too. Most pay monthly upfront but some choose to pay that smaller payment and if I'm done and they don't proceed with next payment I stop working. Idk I do upfront, no idea why other people don't, every other profession will take payment upfront or at least somewhere in the middle, unless it's 9 to 5. If I wanted to be paid at the end I'd get a job. I personally just don't onboard potential clients that are interested but don't want to pay upfront. I realize I loose a lot of clients this way but this is my choice. Not trying to troll, I have a bit of a low right now too.

 

[roydan]

Our default payment terms are that payment is in advance. Clients pay on Jan 1st for January's service.
If a client wants to do net terms, we can do it but there's a small increase in the retainer. I wouldn't call it late fee, I'm not a bank, but it's my way to balance "risk vs reward".

 

[Preying Mantis]

Yea but they don’t usually pay up when it gets to that point but it’s just in case lol